BEING FUTURISTIC. BEING TMRVL.
ANNUAL R EPOR T 2 0 17-18
Being Futuristic. Being Fashion is an attitude with a TMRVL. perspective.
At The Mandhana Retail Ventures Limited (TMRVL), we are democratising fashion, making it accessible across social and economic boundaries, while contributing to the society’s well-being. We also have a vision to scale up innovation, expand categories and streamline operations to deliver value for our stakeholders. We are achieving this by reach deeper into India and enabling, empowering and inspiring people through fashion that helps them ‘look good and do good’. In the changing retail landscape due to dynamic shifts in consumer behaviour, TMRVL is geared to develop wearables that make business sense, are consumer- focused and contribute meaningfully to societal welfare. We are redefining brand engagement through a unique approach that focuses on social issues and gets customers involved in changing our society for the better. We are a brand with a soul and our consumers are the extensions of our label’s narrative. In its essence, TMRVL is dynamic, futuristic, customer- centric and charitable. We are expanding our social outreach and creating products that are eco-friendly and sustainable. Our organic growth into a company that competes on its own terms focuses on delivering goodness through a well-crafted business strategy. 2 THE MANDHANA RETAIL VENTURES LIMITED
About TMRVL TMRVL at a glance. At The Mandhana Retail Ventures Limited (TMRVL), it has been our endeavour to offer the best in fashion to our customers. We are on a journey to create a global brand that uses sustainable textiles and offers unique and trendsetting designs. Over the years, we have grown to provide the best shopping experience to consumers through an expansive retail presence across geographies. Our brand ‘Being Human’ and our association with the ‘Being Human – The Salman Khan Foundation’ champions a differentiated proposition of ‘fashion with a cause’.
OUR BRAND – BEING HUMAN Being Human is dear to millions of customers, with Bollywood celebrity Salman Khan as its effervescent brand ambassador. Our brand is a perfect blend of fashion and ethos, an extension of the charitable trust ‘Being Human – the Salman Khan Foundation’. The Foundation is committed to providing a better life to the underprivileged and the proceeds from its sales carry forward this mission. The brand focuses on customer convenience through leveraging digital platforms. We witnessed a spike in sales through e-commerce tie-ups with Myntra, Abof, and Jabong. Our partnerships with widespread retail chains such as Lifestyle, Shoppers Stop, Splash, Jade Blue, All That Jazz, My Store and Wardrobe, are strengthening our brand prominence. CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 3
Investment Case
WHY INVEST IN TMRVL?
A DISTINGUISHED VAST NETWORK BRAND Our ever-expanding network of retail chains in the domestic as well as Being Human delivers top quality and international markets gives us flexibility to trendy designs at various price points meet demands from across nations and to cater to a large section of customers. helps improve our distribution mix. Our association the Bollywood superstar Salman Khan is a major pull. 57.29% 600+ Gross Profit Margin POS
STRONG BALANCE SOCIAL SHEET RESPONSIBILITIES We have a strong balance sheet with Rightly called ‘a clothing line with a NIL debt to equity ratio. Our operational heart’, Being Human is known for its efficiency and short-term fund-raising charitable contributions for the social practices helps reduce cost. cause of education and health of the underprivileged. 5.75% Negligible debt Royalty is paid to the Being Human Foundation
GROWTH PLANS STRONG CONNECT We aim to grow stronger by We are optimistic of our licence renewal increasing the number of retail points. with Being Human Foundation even We also have plans to introduce a beyond 2020. We are focused on new brand in FY 2018, which will be strengthening our relationship with a boost to our growth meters. our existing as well as new partners, retailers, distributors and customers.
Expanding in Tier II and 900,000 Tier III Cities Loyal customers 4 THE MANDHANA RETAIL VENTURES LIMITED
Key Non-Financial Highlights Our competitive strength.
INTERNATIONAL STORES Number of stores outside India 2018 167 2017 167
DOMESTIC STORES Number of stores in India 2018 443 2017 418
NO. OF EMPLOYEES DISTRIBUTION PARTNERS E-COMMERCE PARTNERS Our people strength Number of partners assisting in Number of partners in the distribution of our products e-commerce platform 2018 2018 2018 6562017 606 72017 10 3 2017 4 CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 5
RETAIL SELLING POINTS Number of stores where our products are sold (online and offline)
2018 610 2017 585
EXCLUSIVE BUSINESS OUTLETS (EBOs) EBOs of the Being Human brand
2018 34 2017 29
STORE-IN-STORE (SIS) SIS wherein clothing of Being Human brand is housed along with other brands
2018 372 2017 351
FRANCHISEES Number of licences given to third parties to sell our products under our brand name 2017 2018 27 24 6 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 7
Product Categories What we offer. Our one-stop-shop concept offers a varied range of products under the menswear, womenswear and accessories categories.
Revenue (%)
Menswear 90 Womenswear 5 Accessories 5 CATEGORY-WISE BUSINESS AND PRODUCT DIVISION
Business Division Category-wise (%)
Menswear 85 Womenswear 15
Menswear Category-wise Division (%) Womenswear Category-wise Division (%)
T-Shirt / Polo 50 Sweaters 2 T-Shirt / Polo / Shrugs / Tops 40 Shirts 20 Hoodies 3 Blouse 20 Denim 12 Jackets 3 Dress 15 Non-denim 7 Innerwear 0.5 Denim 7 Tracks 3 Trackpants / Shorts / Pyjamas 12 Sweaters / Sweatshirts 6 6 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 7
Market Presence Our global footprint. We have a strong global network with 610 points of sales (POS) in 15 countries and strong digital presence with e-commerce in 3 markets. We are eyeing tie-ups with international retail giants in the US and South-East Asia to boost exports.
OUTLETS 35 5 Europe 443 Fiji India 3 1 Nepal 125 Mauritius GCC
Note: Map not to scale 8 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 9
Chairman’s Message C h air m an's Message Last year when I wrote to you, I was optimistic that our economy will grow at 7%+ in FY18 though I had not ruled out some headwinds. As it turned out the economy couldn’t gather steam as expected due to residual effects of demonetisation and some problems in GST implementation.
The Gross Domestic Product (GDP) growth rate was lower at Your management has evolved a market sensing system that 6.7% and that impacted your Company’s business. At micro will keep the Company product portfolio in sync with changes industry level, the competition was intense with ‘market share at and capitalise on them. any cost’ strategies employed by global entrants in the market. The combative market participants advanced the end of season LAUNCH OF ‘CORE LINE’ sale dates and the duration of such sales also increased. This Your Company during the year has formulated the ‘Core Line’ meant larger proportion of volumes were sold at discounted design concept. ‘Core Line’ has a simple design elements that prices. Despite competitive intensity, the Company volumes can be assembled into basic products that can be offered year grew by 11% in domestic market and by 15% in exports. round at multiple price points. This will enable moderation in This represents domestic market growth rate at 1.65 times the discounting and result in better inventory turnarounds. Your GDP growth rate (6.7%) and 1.2 times the rate forecast (9%) management expects the ‘Core Line’ to account for 1/4th of for the apparel industry by experts. And this signals steadily Company volumes in near future. ‘Core Line’ will be launched increasing market penetration for the Company brand which is within next 45 days. good news indeed. Higher discounts affected the revenue growth with a marginal reduction of 0.05% in revenue over last year. Company revenues for the year stood at C259.44 crores. The Company management had to contend with supply chain problems; inadequate working capital took its toll delaying the new season supplies to the stores. Needless to say the Company missed selling opportunities during some crucial days of the season. The pressure on net realisations due to higher discounts was exacerbated by some significant increase in employee costs. The Company has suffered significant drop in EBITDA margins this year under review. Your board and the management is working to rectify structural issues within the organisation as well as with working capital finances. THE MARKET AND THE CONSUMER By all accounts, the long-term trends in the Indian apparel market continue to be positive. The market is expected to grow between 9-10% on CAGR basis to year 2020. Increase in personal incomes, higher aspirational levels in Tier II, III and IV towns and all round growth in consumerism will continue to drive the growth in apparel market. However, the segments within display differential growth rates. The product segments where your Company always had significant offerings namely denim wear and T-shirts for men continue to be high growth market segments expected to continue to grow at 14%. Active wear market has emerged as a high potential category due to the boom in fitness and healthcare related consumption. Your Company is well placed in this segment due to its association with Mr. Salman Khan who is universally followed for his fitness and sculpted physique. While these are broad trends, the market is given to rapidly changing styles and preferences. 8 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 9
The Company volumes grew by 11% in domestic market and by 15% in exports.
GOING DIGITAL I must also mention here that Mr. Hemant Gupta has recently joined as the Chief Financial Officer and Chief Operating By all accounts e-commerce is going to be very influential Officer. Young Hemant brings with him a decade and more channel for retail. According to Boston Consulting Group of experience with branded retail with companies such as (BCG), a consultancy, fashion is the first category that most Blackberry and Carrefour. He will bring intensity of youth and Indians (28%) buy online; mobile phones follow at 20%. This sharpness of experience to husband the operations that are message is not lost on your management. BCG study shows getting larger and complex by the day. I welcome him and look that 50% of those who buy fashion online are from Tier II and forward to a robust and rewarding association. smaller cities, a geography that is of strategic importance to rd Company products. Nearly 2/3 of online buyers are below YEAR AHEAD the age of 35 according to BCG and that is precisely the Company’s current target segment. Your Company therefore There is good news on the national economy. The latest has been expanding its online retail by tying up with online quarterly numbers show GDP growth at 7.7%, so far the retailers like Cloud Tail and Jabong. Company is readying a highest in last 4 years. This will lead to higher personal new line of apparels that will be exclusively sold online. At incomes and private consumption. The Government has opportune time in future the Company may launch its own promised remunerative minimum support prices to farmers. platform for online sales. I assure you that there are many such These flows will course through the economy creating solid exciting ideas on the drawing board. demand for apparels. Your management has lined up new products and new product lines I mentioned earlier. The LICENCE AGREEMENT management team is working vigorously to make up the gaps in working capital that affected deliveries last year. The licence arrangement with Being Human Foundation is the This together with selective and well calibrated expansion of core asset of the Company. The Company management in geographic footprint in Tier II and smaller cities, the Company active collaboration with the Foundation Trustees has nurtured hopes to achieve robust growth in volumes and retrieve the this brand assiduously. I, on behalf of the board, acknowledge lost ground in revenue and margins. The management is also inspired contribution made by Mrs. Alvira Agnihotri, the head regrouping initiatives in export markets. The increasing current of the Foundation, towards building the brand and the market account deficit is a boon in a way since resulting depreciation for ‘Being Human’ clothing line. Licence fees that the Company of Indian rupee will help boost exports. All in all, we look pays has been one of the sources for the Foundation to carry forward to a good year. out its singularly philanthropic work in the area of education and health. The licence agreement will be renewed well before I take this opportunity to thank all stakeholders including the its current term that lasts up to March 2020. Being Human Foundation and marquee investors who have continued to repose confidence in your Company. THE TEAM
Dynamic young team is one of the core strengths of your PRADIP DUBHASHI Company. The team is focused and has a great eye for aesthetics and detail. Some of you who have visited Company outlets must have noticed the distinct look and feel of its décor. The earthy and intimate look and feel is the design work of young Karan Berry and his in-house team. The team is working on new scheme that is economical, adjusts to smaller spaces without losing customer intimacy and appeal.
The latest quarterly numbers show GDP growth at 7.7%, so far the highest in last 4 years. 10 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 11
Business Model Our business model
Devising detailed business strategies to ensure sustainability of business amidst rapidly changing trends, omnichannel buying habits and e-commerce discounting. Our brand Being Human has a reputation for ‘doing good while helping our customers look good’. We work in a calibrated framework to sustain our asset-light business and have plans to move from the current sale-or-return model to an outright sales business to mitigate risk. We craft inimitable designs and strengthen the label with our highly talented global team of over 100 employees across various functions like design, sourcing, marketing, merchandise planning and inventory management.
HOW WE OPERATE? At TMRVL, we structure our activities based on functions, products, regions and channels.
DESIGN OPERATIONS
DEVELOPMENT Our operations team We believe in offering MARKETING focuses on producing relevant solutions for the highest quality our consumers’ evolving Our product development output through cost- Our comprehensive preferences. We enjoy a team strives to achieve efficient processes. We product portfolio has competitive advantage efficiency in developing new integrate all the processes helped us penetrate due to our strong in-house products and improving through well-considered even the global markets. design team headed by the existing bouquet. planning, production and Our presence across designers based out of Profitable methods are management. We maintain both premium and value Europe and India. Our engineered for effective stringent timelines to ensure segments makes our design function analyses development of products. smooth production through brand more popular customer insights and Two stages are involved prudent inventory planning. among customers. We endeavours to make in the development phase To mitigate risks associated operate on omnichannel exclusive and comfortable – prototype development with the process, the retail platforms which designs. Mood boards and salesman samples fabrics and garments enables us to cater and colour cards are (SMS). In the first stage, the produced undergo various to a large number of developed in line with the products are selected based lab tests. After diligent customers. Our distribution trending seasons. Designs on lab dip samples and inspections, the final tech arrangements with the are then passed on to proto appearance. The final files are shared with our leading e-commerce the production team for samples are presented in distinguished vendors. platforms in India has led development of tech files, buyer meetings in the SMS to an elevated consumer after necessary approvals stage. To ensure a smooth experience. on artwork. proto development process, we outsource the production to our large network of trusted vendors. 10 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 11
HOW WE CREATE VALUE? FOR OUR
CUSTOMERS SHAREHOLDERS PEOPLE COMMUNITY We continually redefine As we listed ourselves Our main strength is Doing welfare for the our methods to develop on the stock exchange our people and we community drives us. distinct output. Our in 2016-17, we do everything that We are inspired to target is to deliver want to maximise keeps them driven and merge our values unique fashion through our shareholder encouraged. We have and business to upgradation and value by generating varied opportunities carry out a social innovation. higher revenues and for our people cause for the delivering maximum globally. disadvantaged. returns.
DESIGN DEVELOPMENT OPERATIONS MARKETING
Function
Market Survey, Design and Product Development and Market Survey, Design and Marketing, Digital and Creative Media Sourcing, Supply Chain, Creative Media Customer Insight Merchandising and Planning
Resources
People, Operations, Information Technology, Finance, Corporate Affairs
Product
Menswear, Womenswear, Accessories
Region India, Nepal, South-East Asia, Mauritius, France
Channel
Retail (online and offline) 12 THE MANDHANA RETAIL VENTURES LIMITED
Key Performance Indicators Focus on long-term and profitable growth 2,594 2,596 2,157 1,719
17-18 16-17 15-16 14-15
Revenue (` in million)
Gross income received from the sale of our products. 4.4 3.1 3.0 2.2
17-18 16-17 15-16 14-15
Advertisement cost (%) Expenses incurred in promoting our brand and services. (As a % of revenue)
Footnote: Kindly note that 2014-15 and 2015-16 are IGAAP figures whereas 2016-17 and 2017-18 is as per IND AS CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 13 443
Our management is focused on long- 402 term value creation for stakeholders. 209.6 These critical indicators help understand 286.2 and measure our financial health.
17-18 16-17 15-16 14-15
EBITDA (` in million) Earnings before interest, tax, depreciation and amortisation is a measure to evaluate our operating performance. 97 91 63 41
17-18 16-17 15-16 14-15
ROE (%) 57.96 53.51 49.10 31.8
17-18 16-17 15-16 14-15
ROCE (%) 57 60 54 47
17-18 16-17 15-16 14-15
Gross Margin (%) 14 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 15
Value Retail
Being value- Driven
Being a highly regarded brand among the youth and value-specific buying gaining a strong foothold, we intend to cater to customers with fast fashion at reasonable prices. TMRVL is dedicated to devising business strategies that will enable us to achieve our high growth aspirations through re-inventing the value retail space.
15%-20% Reduction in product pricing to cater to value- for-money customers 14 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 15
Value retail formats hold a promise to the consumers that they will get value for every penny they spend. Despite the differentiated value curve, value retailing doesn’t compromise on the stores’ ambience and the quality customer service.
CREATING VALUE RETAIL With the changing global value retail paradigm, there is a noticeable shift in consumer preferences, where they are demanding quality products at inexpensive pricing. Keeping up with competitive pricing has made way for a new trend called value retailing. Our mission is to enter value retail and reach masses through the organised channels. Our homegrown brands are well- connected to the youth in terms of product lines and developing different labels at reasonable price points will expand our customer base. We also plan to penetrate deeper into Tier II and III cities to cater to value-focused customers. Moreover, given the unique social aspect of the brand, more consumers will get a chance to contribute towards society as our Being Human clothing and accessories will be available across various price points. Being a pull brand, Being Human will continue to maintain its niche market and will ensure there is no brand dilution. We are implementing cost-effective strategies and have significantly cut down costs in the new store design development. Meanwhile, we have ensured the ethos of the brand is not affected and the brand image is maintained. Our business plans are aligned to sustain competitive advantage in the marketplace and win the loyalty of customers. 16 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 17
Marketing and Branding
Being innovative Within five years, Being Human has become a global brand with ~20% of business comprising exports. We aim to take this expansion forward, growing beyond national boundaries by adopting strategies that will enable us to widen our reach. In the domestic market too, we are excelling by adopting innovative approaches. Our differentiated branding strategy comprises advertising in print media, electronic channels and endorsement by famous Indian personalities who also participate in our fashion shows. Higher ‘same-store growth’ is another strategy we have backed to increase our brand recall. Our target is to maximise the sales growth of our existing stores by 10% through fortifying our marketing efforts. Salman Khan being the face of Being Human and his endorsements make an unparalleled positive impact on our sales. On his birthday, our single-day sales jumped to D14.40 crores. 16 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 17 372 351 2018 EXPERIENTIAL RETAIL FORMATS 2017 Our retail formats are spread over an expansive 70,000+ sq. ft. with 134 outlets globally, we have created strong brand prominence. We love to delight 34 29 27 24 10 our customers and it reflects in our store- 7 4 3 designs as each store in a city is given the region’s essence and feel. Further, we EBO SIS Franchisees Distributors E-commerce conduct periodic customer engagement programmes to build a better connect. Our 360-degree presence across Indian retail (` in million) While being customer-oriented, we ensure there is no impairment caused to 982 the environment, which is why our stores are built on the themes of recycle, reuse and reinvent. 25 601 New stores opened 366 in 2017-18 320 212 55 36
EBO Franchisees Distributors E-commerce Exports Others SIS
Category-wise sales in 2017-18
SMARTLY INTEGRATED TECHNOLOGY Considering the enormous benefit of integrating Information Technology (IT) into our existing operations, we are making smart use of technology to capture customer preferences and enhance the shopping experience. Our e-commerce presence has gone up significantly through platforms like Jabong and Myntra. To engage with our target groups, our IT team created a unique concept called Shopsense through which customers can browse our collection, match and create looks, and share with friends for feedback through e-mail or WhatsApp using a large touch screen before making a purchase decision. It provides a combined online and offline experience to the customer within the store itself.
GROWTH STRATEGIES Attract New Efficient Working • 12 new domestic outlets planned for FY 2018-19 Customers Capital Cycle • Target same-store growth of 10% for greater profits • Strengthen sales partnerships with existing franchisees • Introduce new POS to cater to larger base • Expand e-commerce footprint IMPROVED FINANCIAL • Focus on the underpenetrated markets for distribution PERFORMANCE • Open new revenue lines 18 THE MANDHANA RETAIL VENTURES LIMITED
Customer Centricity
Being customer- centric Happy customers mean everything to us. TMRVL has a strong and growing loyal customer base of ~9lakh people. The brand enjoys a high recall among its target audience, which is primarily in the age group of 18 to 40 years. We aim to provide varied options at the right price points to attract customers, while our lucrative loyalty programmes are devised to retain their interest in our brand. The ‘100% Share’ is our loyalty programme in which customers earn ‘Goodness points’, along with noteworthy returns for shopping at a Being Human store. CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 19
UNIQUE DESIGNS FOR EVERY CUSTOMER PREFERENCE • Launching the latest and trendy designs before each fashion season • Regularly following international fashion updates to create international trends • Developing innovative marketing strategies to attract 900,000 new audiences Members in the current loyalty programme • Launching of ‘Core Line’ containing evergreen pieces
CREATING VALUE FOR EVERY CUSTOMER NEED • Catering to a wide segment of consumers • Introducing reduced pricing by almost 15%-20% for multiple products • Creating multiple price entry points 20 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 21
People at TMRVL Our TMRVL provides individuals with the competencies people and infrastructure that enables them to develop and grow. We maintain an energetic and positive work culture to maximise the potential of individuals. The success of our business is credited to our family of 656 employees.
LEARNING AND DEVELOPMENT We foster a learning environment at TMRVL wherein we develop our internal talent EMPLOYEE ENGAGEMENT pool for positions within the organisation. In our endeavour to learn from each other’s We understand the importance of keeping experiences, we launched BH Learning our employees engaged and motivated. We Academy which caters to various learning believe in creating a day-to-day experience that interventions to facilitate the growth and offers employees meaning, impact, connection development of our employees. Programmes and appreciation in their everyday work, include Basics of Retail, Gaining Customer thereby strengthening the culture of employee Loyalty, Sign Language, ESOPs focusing engagement. Meaningful and well-defined on the means of achieving great retail roles and responsibilities, deep employee performance by enhancing store productivity engagement interventions, appreciating and and profitability, Fundamentals of Coaching, rewarding employees for putting in their best for Mentoring, Leadership, Team Motivation and the organisation are integral to our employee the art of giving constructive feedback for engagement strategy. managers to get the best out of their teams.
HEALTHY ENVIRONMENT We ensure a healthy and safe environment for our employees, giving utmost priority to hygiene around our workplace. Our workspaces are embellished with spacious contours and vibrant hues that stimulate seamless flow of ideas across all levels. This enables our employees to work more creatively and efficiently. 20 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 21
Corporate Social Responsibility Save a Life. Shape a Life. We are extensively considering various projects/areas where the Company can contribute towards its defined Corporate Social Responsibility (CSR) activities. The primary responsibility of our CSR plan revolves around social activities relating to promoting education, including special education and employment enhancing vocational skills especially among the differently abled people, health and emergency, promoting healthcare and training to promote eligible sports.
We sponsored children education
To commence with, we sponsored education for 50 children at Ek Prayaas Educational Society at Ek Prayaas Educational Society, a Kolkata based NGO towards the cost of educating and uplifting the lives of children belonging to the rural areas of Kolkata, covering their study material, uniform and meals.
In our upcoming initiatives, we are not just looking at engaging with NGOs, but defining our CSR activities under various projects, including Upskilling the Community which is aimed at arming the country’s young underprivileged ones with the skills needed to improve prospects and secure jobs in the industries of today. Our plan is to train youngsters in both soft and work skills and make them readily employable and hence, also addressing India’s industrial concern of the shortage of skilled talent. In this, we plan to empower our employees to volunteer themselves to spread their knowledge and train the young minds on various subjects related to Retail Management. This will form part of our Corporate Sustainability Plan. Healthcare is another domain where we will be concentrating upon majorly to help people who are suffering with Cancer and other deadly diseases to lead a normal and healthy life. 22 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 23 Board of Directors
01 02 03
04 05 06
01 Mr. Pradip Dubhashi 03 Mr. Ramnath Pradeep 05 Mr. Priyavrat Mandhana CHAIRMAN, NON-EXECUTIVE AND INDEPENDENT NON-EXECUTIVE AND INDEPENDENT DIRECTOR EXECUTIVE DIRECTOR DIRECTOR Mr. Ramnath Pradeep holds a master’s degree Mr. Priyavrat Mandhana holds a bachelor’s Mr. Pradip Dubhashi was appointed as in Economics and Law. He had an enriching degree of Commerce from Mumbai University Chairman, Non-Executive and Independent experience with Corporation Bank, Central and has over four years of experience in Director of our Board on October 7, 2016. Bank of India, State Bank of India and Bank of Mandhana Industries Limited (MIL). He has He holds a bachelor’s degree of Engineering India and was appointed as a legal adviser to also completed ‘Masters of Innovation and in Electrical Engineering from College of ONGC Ltd. He has also been on the Boards Entrepreneurship’ from University of Warwick, Engineering Pune (CoEP) and a postgraduate of IILFS, Centbank Financial Services Ltd., UK. He plays an important role in strategizing Diploma in Management (PGDM) degree from Centbank Home Finance Ltd., Corp Bank and monitoring the retail business of the XLRI School of Management (Jamshedpur). He Security Ltd., Indian Institute of Banking and Company. has 45 years of experience in development Finance Ltd. and Zen Advisors Pvt. Ltd. banking industry and strategy consulting. 06 Mr. Sachin Jaju 04 Mrs. Sangeeta Mandhana NON-EXECUTIVE DIRECTOR 02 Mr. Kiran Vaidya MANAGING DIRECTOR Mr. Sachin Jaju holds a bachelor’s degree of NON-EXECUTIVE AND INDEPENDENT DIRECTOR Mrs. Sangeeta Mandhana holds a bachelor’s Commerce and a master’s degree in Accounts Mr. Kiran Vaidya was appointed degree of Commerce from Calcutta University. from R.A. Poddar College, Mumbai. He also Non-Executive and Independent Director on With her expertise in designing apparels has a master’s degree in Marketing from our Board on October 7, 2016. He holds and outfits, she was heading the Design Narsee Monjee Institute of Management a bachelor’s degree of Commerce from department of Golden Seams Industries Private Studies (NMIMS), Vile Parle. He has hands-on Bangalore University and is an associate Limited as Vice President – Design from experience of 19 years in business. member of Institute of Cost and Works July 1, 2011 till August 31, 2016. Accountants of India (ICWAI). He has over 35 years of experience in various industries in the fields of finance, accounts, costing, budgeting and project finance. 22 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 23 Executive Office
01 02 03 04
05 06 07
01 Mr. Manish Mandhana the position of Vice President − Business 06 Mr. Ritesh Bhardwaj CHIEF EXECUTIVE OFFICER Development and Marketing with TMRVL. He VICE PRESIDENT – FINANCE, ACCOUNTS AND is responsible for the overall management of COMMERCIAL Mr. Manish Mandhana holds a bachelor’s the core business of the brand, which includes degree in Commerce from Mumbai University Mr. Ritesh Bhardwaj is a Chartered strategic and operational marketing, franchise and has about 25 years of experience Accountant and holds a bachelor’s degree and business development, logistics, retail in the textile industry. He is the Chief of Commerce from Rajasthan University. planning, among others. Executive Officer of The Mandhana Retail His rich experience in the fields of finance, Ventures Limited. He has extensive and rich accounting and commerce entrusts him with entrepreneurial experience in diverse areas of 04 Mr. Jagdish Pamwani the responsibility of overseeing the day-to-day marketing, design, merchandising, production VICE PRESIDENT – SALES functioning of other core functions, including and management. human resources, Information Technology (IT) Mr. Jagdish Pamwani holds a bachelor’s and warehouse. degree in Commerce from Mumbai 02 Mr. Hemant Gupta University and has completed a Professional CHIEF FINANCIAL OFFICER & CHIEF OPERATING Development Programme from Cornell 07 Mr. Virendra Varma OFFICER University, New York. He is designated as COMPANY SECRETARY Vice President – Sales with TMRVL and is Mr. Gupta is a Chartered Accountant by Mr. Virendra Varma is an Associate Member handling sales in the following verticals: Large profession with a rich experience of 18 of the Institute of Company Secretaries of Format Stores (LFS), Multi Brand Outlet (MBO), years in finance & operations, M&A, Legal India. He holds a bachelor’s degree of e-commerce and distribution. and compliance. He was associated with Commerce and also a bachelor’s degree of Blackberrys (one of the biggest domestic Law from Mumbai University. He has over apparel brands in India) as CFO and head 05 Ms. Purvi Joshi nine years of professional experience in the of Commercial, legal & Secretarial. He also VICE PRESIDENT – SOURCING AND INTERNATIONAL fields of corporate governance, compliance, served as a CFO for Carrefour India (2nd BUSINESS secretarial and administration of listed and largest retail chain in the world) & was unlisted companies in India and overseas. Ms. Purvi Joshi holds a bachelor’s degree instrumental in setting up their retail business in Arts from SK Somaiya Institute, Mumbai in India. He is handling over all corporate University. Her educational certifications strategy, business operations, finance & all the include Fashion Designing and Apparel other functions for the Company. Merchandising from India International Trade Centre and Quality Assurance from 03 Mr. Kunal Mehta Indian Institute of Quality Assurance and a VICE PRESIDENT – BUSINESS DEVELOPMENT AND Retail Management from Welingkar Institute, MARKETING Mumbai. She handles end-to-end designing, merchandising, quality assurance, buying Mr. Kunal Mehta is a Commerce graduate and sourcing, production and international from Mumbai University. Currently, he holds marketing for our brand Being Human. 24 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 25
Accolades
2018
Customer Loyalty Initiative of the Year - Indian Retail Awards
2017
Most Iconic Brand - Made in India
2016
Images Most Admired Fashion Brand of The Year - Images Fashion Awards
2015
• Emerging Brand Award by National Awards - Marketing Excellence
• International Day for Persons with Disabilities - TRRAIN Retail Awards 24 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 25
Corporate InforMation
BOARD OF DIRECTORS KEY MANAGERIAL PERSONNEL
Mr. Pradip Dubhashi − Non-Executive and Independent Chairman Mr. Manish Mandhana − Chief Executive Officer
Mr. Ramnath Pradeep − Non-Executive and Independent Director Mr. Hemant Gupta − Chief Financial Officer & Chief Operating Officer
Mr. Kiran Vaidya − Non-Executive and Independent Director Mr. Virendra Varma − Company Secretary
Mrs. Sangeeta Mandhana − Managing Director
Mr. Priyavrat Mandhana − Executive Director
Mr. Sachin Jaju − Non-Executive Director
BOARD COMMITTEES STATUTORY AUDITORS Audit Committee M/s. BSR & Co. LLP Chartered Accountants Mr. Kiran Vaidya − Chairman Mr. Pradip Dubhashi − Member SOLICITORS Mr. Ramnath Pradeep − Member Mr. Priyavrat Mandhana − Member M/s. Crawford Bayley & Co. Advocates & Solicitors Nomination & Remuneration Committee INTERNAL AUDITOR Mr. Ramnath Pradeep − Chairman Mr. Pradip Dubhashi − Member M/s. Aneja Assurance Private Limited Mr. Kiran Vaidya − Member Chartered Accountants
Stakeholders Relationship Committee SECRETARIAL AUDITOR
Mr. Sachin Jaju − Chairman Mr. Nitin R. Joshi − Practicing Company Secretary Mr. Priyavrat Mandhana − Member Mr. Ramnath Pradeep − Member BANKERS
Corporate Social Responsibility Committee HDFC Bank Limited Axis Bank Limited Mr. Pradip Dubhashi − Chairman Corporation Bank Mr. Ramnath Pradeep − Member State Bank of India Mrs. Sangeeta Mandhana − Member REGISTRAR AND SHARE TRANSFER AGENTS Risk Management Committee Link Intime India Private Limited Mr. Pradip Dubhashi − Chairman (Unit: The Mandhana Retail Ventures Limited) Mr. Ramnath Pradeep − Member C-101, 247 Park, LBS Marg, Vikhroli (W), Mumbai 400 083 Mr. Kiran Vaidya − Member Tel: 91-22-49186000 Mr. Sachin Jaju − Member Fax: 91-22-49186060 E-mail: [email protected] Management Committee
Mr. Priyavrat Mandhana − Chairman Mrs. Sangeeta Mandhana − Member Mr. Sachin Jaju − Member
Registered Office Corporate Office Plot No. E-132, M.I.D.C, 006-008, Peninsula Centre, Tarapur Industrial Area, Dr. S. S. Rao Road, Boisar, Dist. Palghar - 401 506 Parel, Mumbai - 400 012 Tel: 91- 2525-697301 to 306 Tel: 91-22-4353 9191 Fax: 91-22-4353 9358 Fax: 91-22-4353 9216 E-mail: [email protected] Website: www.mandhanaretail.com 26 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 27
Directors’ Report
Dear Shareholders, 6. Corporate Governance Reports on Corporate Governance and Management The Directors have pleasure in presenting the 7th Annual Report Discussion and Analysis, in accordance with SEBI (Listing and the Audited Accounts of the Company for the year ended Obligations and Disclosure Requirements) Regulations, 2015 31st March, 2018. (“Listing Regulations”), along with a certificate from Auditors 1. Financial Highlights regarding compliance of the Corporate Governance are given separately in this Annual Report. (` in Lakh) Particulars 2017-18 2016-17 All Board Members and Senior Management Personnel have Total Turnover 25,944.93 25,958.80 affirmed compliance with the code of conduct for the financial Other Income 128.78 177.38 Profit Before Interest, Depreciation and 2,095.74 2,862.26 year 2017-18. A declaration to this effect signed by the Chief Taxation Executive Officer of the Company is contained in this annual Less: 1. Interest 177.24 240.10 report. 2. Depreciation 367.36 340.02 Profit Before Taxation 1,551.14 2,282.14 7. Public Deposit Less: Provision for Taxation Your Company has not accepted any Public Deposits under Current Tax 181.00 1240.00 Chapter V of the Companies Act, 2013. Deferred Tax 380.08 (355.84) Net Profit for the Year 990.06 1,397.98 8. Directors and Key Managerial Personnel Less: Income Tax paid for earlier year (87.34) - (KMP) Profit after Taxation 902.72 1,397.98 In accordance with the provisions of the Companies Act, Add : Other Comprehensive Income for the 10.38 9.27 2013 and the Articles of Association of Company, Mr. Year Priyavrat Mandhana retires by rotation and being eligible, Total Comprehensive Income for the year 913.10 1,407.25 Less: Transfer to General Reserve 0.00 0.00 offers himself for re-appointment. Brief details of Mr. Priyavrat Balance carried forward 913.10 1,407.25 Mandhana as required under Regulation 36(3) of Listing Regulations are provided in the notice of the ensuing Annual 2. Company Performance and Business General Meeting. Overview The members’ approval is being sought at the ensuing Annual A detailed discussion of operations for the year ended General Meeting for the above appointment. 31st March, 2018 is provided in the Management Discussion and Analysis Report, which is presented in a separate section The Company has received declarations from all the forming part of this Annual Report. Independent Directors of the Company, confirming that they 3. Dividend meet the criteria of independence as prescribed under the Companies Act, 2013 and Regulation 16(1)(b) SEBI (Listing Considering the capital requirement for ongoing business Obligations and Disclosure Requirements) Regulations, 2015. expansion, the Board of Directors recommend conserving the profit and ploughing back the same to further stimulate the Pursuant to the provisions of Section 203 of the Companies growth of the Company Act, 2013, Mr. Hemant Gupta was appointed as the 4. Transfer to Reserve Chief Financial Officer & Chief Operating Officer of the Company with effect from 26th March, 2018 based on the The Company does not propose to transfer amounts to the recommendation of the Nomination and Remuneration general reserve out of the amount available for appropriation Committee of the Board. During the year under review, none and an amount of ` 913.10 Lakh is proposed to be retained of the KMP of the Company resigned from their respective in the profit and loss account. positions in the Company.
5. Material Changes and Commitments, if 9. Board Evaluation any, Affecting the Financial Position of the Company Which Have Occurred Between the Evaluation of performance of all Directors is undertaken End of the Financial Year of the Company to annually. The Company has implemented a system of Which the Financial Statements Relate and evaluating performance of the Board of Directors and of the Date of the Report its Committees and individual Directors on the basis of a structured questionnaire which comprises evaluation criteria No material changes and commitments have occurred after taking into consideration various performance related aspects. the close of the financial year till the date of this report, which affect the financial position of the Company. 26 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 27
The Company’s Independent Directors met on 23rd February, effective risk management the Board of Directors constituted 2018 without the presence of Executive Directors or Members the Risk Management Committee to monitor and review risk of the Management. All the Independent Directors attended management, assessment and minimization procedures and the Meeting. The Board of Directors expressed their satisfaction to identify, review and mitigate all elements of risks which the with the evaluation process. Company may be exposed to.
10. Number of Meetings of the Board of The Company recognizes that risk is an integral and Directors unavoidable component of its business. Hence, the company During the year 5 (Five) Board Meetings were convened and has adopted a Risk Assessment and Management policy held. Details of meetings of the Board and its Committees (“Policy”) to formalize risk based decision-making together alongwith the attendance of the Directors therein have been with management processes. Risks are managed through disclosed in the Corporate Governance Report (Annexed a formal risk process as set forth in the Policy. This policy herewith). articulates the requirements for processes which include identifying, assessing, measuring, and monitoring risk 11. Vigil Mechanism / Whistle Blower Policy for activities across the organization and establishes governance Directors and Employees roles for risk management. The Company has established a Vigil Mechanism, which includes a Whistle Blower Policy, for its Directors and 15. Particulars of Loans, Guarantees or Employees, to provide a framework to facilitate responsible Investments and secure reporting of concerns of unethical behavior, actual No loans, guarantees or Investments covered under section or suspected fraud or violation of the Company’s Code of 186 of the Companies Act, 2013, have been given or Conduct & Ethics. The Whistle Blower Policy is posted on provided during the year. the website of the Company and the web-link to the same is http://www.mandhanaretail.com/investor-relations.php 16. Indian Accounting Standards (Ind-As) As mandated by the Ministry of Corporate Affairs (MCA), 12. Audit Committee the Company has adopted Indian Accounting Standards As on 31st March, 2018, the Audit Committee comprised of (“Ind AS”) from 1st April, 2017 with a transition date being four members viz. 3 Independent Directors and 1 Executive 1st April, 2016. The Financial Results for the year 2017-2018 Director, given as under: have been prepared in accordance with IND-AS, prescribed under Section 133 of the Companies Act, 2013 read with 1. Mr. Kiran Vaidya - Chairman the relevant Rules issued thereunder and the other recognized 2. Mr. Pradip Dubhashi accounting practices and policies to the extent applicable. 3. Mr. Ramnath Pradeep 4. Mr. Priyavrat Mandhana 17. Related Party Transactions All contracts/arrangements/transactions entered by the Further details on the Audit Committee are provided in the Company during the financial year with related parties Corporate Governance Report (Annexed herewith). were in ordinary course of business and on arm’s length basis. During the year, the Company had not entered into 13. Nomination and Remuneration Policiy any contract/arrangement/ transaction with related parties The Board of Directors has formulated a Policy which lays which could be considered material under Regulation 23 down a framework for selection and appointment of Directors of Listing Regulations. Accordingly, the disclosure of Related and Senior Management and for determining qualifications, Party Transactions as required under Section 134(3)(h) of the positive attributes and independence of Directors. Companies Act, 2013 in Form No. AOC - 2 is not applicable. The Policy on materiality of related party transactions The Policy also provides for remuneration of Directors, and dealing with related party transactions as approved Members of Senior Management and Key Managerial by the Board may be accessed through the following link: Personnel. http://www.mandhanaretail.com/investor-relations.php. Your Directors draw attention of the members to Note No. 42 to the [Details of Nomination and Remuneration Policy are given financial statements which sets out related party disclosures. under Annexure - ‘C’ to this Report.] Prior omnibus approval is obtained on an annual basis for 14. Risk Management Policy transactions with related parties which are of a foreseeable The Company has a well-defined risk management and repetitive nature. The transactions entered into pursuant framework in place, which provides an integrated approach to the omnibus approval so granted and a statement giving for identifying, assessing, mitigating, monitoring and reporting details of all transactions with related parties are placed of all risks associated with the business of the Company. before the Audit Committee and Board of Directors for their Although the Company is not mandatorily required to review on periodical basis. constitute the Risk Management Committee, but to ensure 28 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 29
18. Managerial Remuneration Remuneration to Directors and Key Managerial Personnel i. The percentage increase in remuneration of each Director, Chief Executive Officer and Company Secretary during FY 2017-18 and ratio of the remuneration of each Director to the median remuneration of the employees of the Company for FY 2017-18 are as under:
Remuneration of Ratio of remuneration of % increase in Sr. Director/ KMP for each Whole-Time Director Name of Director /KMP and Designation remuneration FY 2017-18 to Median Remuneration of No. in FY 2017-18 (in `) Employees 1 Mrs. Sangeeta Mandhana- 87,08,138 Nil 40.92 Managing Director# 2 Mr. Priyavrat Mandhana - 87,08,138 Nil 40.92 Executive Director# 3 Mr. Sachin Jaju - 1,50,000** N.A. N.A. Non-Executive Director 4 Mr. Pradip Dubhashi - 5,50,000** N.A. N.A. Non-Executive Chairman and Independent Director 5 Mr. Ramnath Pradeep- 5,75,000** N.A. N.A. Non-Executive and Independent Director 6 Mr. Kiran Vaidya - 5,25,000** N.A. N.A. Non-Executive and Independent Director 7 Mr. Manish Mandhana - 10,014,720 N.A. N.A. Chief Executive Officer* 8 Mr. Virendra Varma - 11,76,120 10% N.A. Company Secretary 9 Mr. Hemant Gupta - N.A. N.A. N.A. Chief Financial Officer & Chief Operating Officer@ # During the financial year 2017-18, Mrs. Sangeeta Mandhana and Mr. Priyavrat Mandhana was paid remuneration at ` 8,34,560/- per month (inclusive of company’s contribution to provident fund). In view of limits provided under the provisions of Section 197 of the Companies Act, 2013, the excess remuneration of ` 13,06,582/- each was refunded by Mrs. Sangeeta Mandhana and Mr. Priyavrat Mandhana.
*The appointment of Mr. Manish Mandhana as the CEO of the Company is effective from 1st April, 2017 and hence no remuneration was paid to him in the financial year 2016-17.
@Mr. Hemant Gupta was appointed as the CFO & COO of the Company w.e.f. 26th March, 2018, however, Mr. Gupta resumed the services of the Company w.e.f. 2nd April, 2018 and hence no remuneration was paid to him in the financial year 2016 -17 and 2017-18.
** Exclusive of taxes
Note: Remuneration paid to each Whole-Time Director and KMP includes Salary, allowances, company’s contribution to provident fund and monetary value of perquisites, if any. The remuneration paid to Non-Executive and/or Independent Directors comprises of sitting fees only. ii. The median remuneration of employees of the Company during FY 2017-18 was `2,12,832/; iii. In the financial year under review, there was an increase of 1.77% in the median remuneration of employees; iv. There were 653 permanent employees on the rolls of the Company as on 31st March, 2018 (excluding both the Executive Directors & Mr. Hemant Gupta, CFO & COO); v. Average percentage increase in the salaries of employees other than the managerial personnel in the last financial year i.e. FY 2017- 18 was 9.20% as compared to FY 2016-17. As regards comparison of Managerial Remuneration of FY 2017-18 over FY 2016-17, details of the same are given in the above table at sr. no. (i); vi. It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.
Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate statement and forms part of the Annual Report. Further, this report is being sent to the Members excluding the said statement. The said statement is available for inspection of members at the Registered Office of the Company during working hours upto the date of the Annual General Meeting and shall be made available to any shareholder on request. The said statement is also available on the website of the Company, the weblink to which is www.mandhanaretail.com. 28 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 29
19. Statutory Auditors and Auditors’ Report 24. Adequacy of Internal Financial Controls In accordance with Section 139 of the Companies Act, The Company has adequate internal financial controls in place 2013, M/s. BSR & Co., LLP, Chartered Accountants (Firm with reference to financial statements. These are continually Registration Number: 101248W/W-100022) were appointed reviewed by the Company to strengthen the same wherever by the shareholders of the Company at the 6th Annual required. The internal control systems are supplemented by General Meeting held on 20th September, 2017, as the internal audit carried out by an independent firm of Chartered Statutory Auditors for a period of 5 years to hold office until Accountants and periodical review by the Management. The the conclusion of the 11th Annual General Meeting of the Audit Committee of the Board addresses issues raised by both, Company. the Internal Auditors and the Statutory Auditors.
Earlier, proviso to Section 139(1), of the Companies Act, 25. Directors’ Responsibility Statement 2013 provided that the appointment of the Statutory Auditors Pursuant to the requirements under sub section (3)(c) and (5) is required to be ratified by the Members at every Annual of Section 134 of the Companies Act, 2013, with respect to General Meeting held during their tenure. However, the said Directors’ Responsibility Statement, it is hereby confirmed that; proviso was omitted w.e.f. 7th May, 2018 by the Companies Amendment Act, 2017 and thereby the notice for this i) in the preparation of the annual accounts for the financial 7th Annual General Meeting does not include the proposal year ended 31st March, 2018, the applicable Accounting seeking ratification of the appointment of the Statutory Standards have been followed along with proper explanation Auditors. relating to material departures;
The Auditors Report does not contain any qualification, ii) the Directors have selected such accounting policies and reservation or adverse remark on the financial statements for applied them consistently and made judgments and estimates the year ended 31st March, 2018. The Notes to the financial that were reasonable and prudent so as to give a true and fair statements referred in the Auditors Report are self-explanatory view of the state of affairs of the Company at the end of the and therefore do not call for any comments under Section financial year and of the profit of the Company for the year 134 of the Companies Act, 2013. The Auditors’ Report is under review; enclosed with the financial statements in this Annual Report. iii) the Directors have taken proper and sufficient care for the There is no incident of fraud requiring reporting by the auditors maintenance of adequate accounting records in accordance under Section 143(12) of the Companies Act 2013. with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing 20. Secretarial Audit Report and detecting fraud and other irregularities; Pursuant to the provisions of Section 204 of the Companies Act, 2013, and the Rules made thereunder, the Company has iv) the Directors have prepared the annual financial statements appointed Mr. Nitin R. Joshi, Practicing Company Secretary on a going concern basis; (Certificate of Practice No. 1884 and Membership No. FCS- 3137) as the Secretarial Auditor of the Company. The v) the Directors have laid down internal financial controls to be Secretarial Audit Report is annexed as Annexure - ‘D’ and followed by the Company and that such internal financial forms an integral part of this Report. The Company has controls are adequate and operating effectively; and complied with all the applicable secretarial standards. vi) the Directors have devised proper systems to ensure The Secretarial Audit Report does not contain any qualification, compliance with the provisions of all applicable laws and that reservation or adverse remark. The statements referred in the such systems are adequate and operating effectively. Secretarial Audit Report are self-explanatory and therefore do not call for any comments under Section 134 of the 26. Particulars of Energy Conservation, Companies Act, 2013. Technology Absorption and Foreign Exchange Earnings and Outgo 21. Corporate Social Responsibility Particulars of Conservation of Energy, Technology Absorption The Annual Report on CSR activities for the financial year and Foreign Exchange Earnings and Outgo as per section 2017-18 is enclosed as Annexure - ‘B’. 134(3)(2) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 for the year ended 22. Subsidiaries, Joint Ventures and Associate 31st March, 2018 are provided under Annexure - ‘A’ to this Companies report. The Company has no subsidiary, Joint Venture and Associate Company as on 31st March, 2018. 27. Extract of Annual Return The extract of the Annual Return in prescribed Form No. MGT- 23. Significant and Material Orders Passed 9 is provided under Annexure - ‘E’ forming part of this Report. by the Regulators or Courts or Tribunals Impacting the Going Concern Status and 28. Others Company’s Operations in Future Your Directors state that no disclosure or reporting is required There are no significant and material orders passed by the in respect of the following items as there were no transactions Regulators or Courts or Tribunals which would impact the on these items during the year under review: going concern status and the Company’s future operations. 30 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 31
1. The details relating to deposits, covered under Chapter V of 29. Acknowledgement the Act, since neither the Company has accepted deposits The Directors take this opportunity to thank the Shareholders, during the year under review nor there were any deposits Financial Institutions, Banks, Customers, Suppliers, Regulators, outstanding during the year. Government Authorities - Central and State Government & Local. 2. Details relating to issue of sweat equity shares, stock options, and shares with differential rights as to dividend, The Directors also place on record their appreciation to the voting or otherwise, since there was no such issue of shares. employees at all levels for their hard work, dedication and commitment. 3. None of the Whole-Time Directors of the Company received any remuneration or commission from any of its For and on behalf of the Board of Directors subsidiaries. The Mandhana Retail Ventures Limited (formerly known as Mandhana Retail Ventures Limited) Your Directors further state that during the year under review, there were no cases filed under the Sexual Harassment of Sangeeta Mandhana Priyavrat Mandhana Women at Workplace (Prevention, Prohibition and Redressal) Managing Director Executive Director Act, 2013. DIN: 06934972 DIN: 02446722
Place: Mumbai Date: 28th May, 2018
ANNEXURE – 'A' to Directors' Report Conservation of Energy, Technology absorption, Foreign Exchange Earnings and Outgo
(A) Conservation of Energy : The operations of your Company are not energy intensive. However, wherever possible your company strives to curtail the consumption of energy on a continued basis by using energy-efficient equipment. As energy costs comprise a very small part of your Company’s total expenses, the financial implications of these measures are not material.
The Company consciously makes all efforts to conserve energy across all its operations.
(B) Technology Absorption : The Company continues to use the latest technologies for improving productivity and quality of its products. There has been no import of technology during the year under review.
(C) Foreign Exchange Earnings and Outgo : The Foreign Exchange earnings and foreign exchange outgo by the Company during the year are:
Earnings : ` 30,89,93,996/-
Outgo : ` 8,67,84,889/-
For and on behalf of the Board of Directors The Mandhana Retail Ventures Limited (formerly known as Mandhana Retail Ventures Limited)
Sangeeta Mandhana Priyavrat Mandhana Managing Director Executive Director DIN: 06934972 DIN: 02446722
Place: Mumbai Date: 28th May, 2018 30 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 31
ANNEXURE – ‘b’ to Directors’ Report
Annual Report on Corporate Social Responsibility activities for the financial year 2017-18 1. A Brief Outline of the Company’s Corporate Social Responsibility (CSR) Policy, Including Overview of Projects or Programs Proposed to be Undertaken and A Reference to the Web-Link to the CSR Policy and Projects or Programs The Company is dedicated towards its social responsibility and aims to contribute to society by supporting and enabling the social and economic development of local communities in India. In alignment with our vision and guiding principles, through our CSR initiatives we aim to address India’s most pressing challenges related to education and health.
The CSR Policy of the Company sets out the Company’s commitment and approach towards Corporate Social Responsibility of improving the quality of life of the communities it serves. Our philosophy is interwoven in all the three thrust areas, i.e. Education, Employability and Entrepreneurship – the Company endeavours to enhance employability of youth and women.
The initial CSR focus is driven by two broad themes, i.e. Educational initiatives for underprivileged and Employability / skill development (for underprivileged youth), for economic progress and social commitment.
The CSR policy is placed on the website of the Company and link for the same is http://www.mandhanaretail.com/investor-relations.php
2. Composition of the CSR Committee Name of the Members Category Mr. Pradip Dubhashi (Chairman) Non - Executive and Independent Director Mr. Ramnath Pradeep Non - Executive and Independent Director Mrs. Sangeeta Mandhana Executive Director
The composition of the Committee is in compliance with Section 135 of the Companies Act, 2013. 3. Average Net Profit of the Company for Last Three Financial Years ` 3,199.60 Lakh.
4. Prescribed CSR Expenditure ` 63.99 Lakh representing 2% of the Average Net Profit of the Company for the last three financial years.
5. Details of CSR Spent During the Financial Year (a) Total amount spent for the financial year - `4.60 Lakh (b) Amount unspent, if any - ` 59.39 Lakh. (c) Manner in which the amount spent during the financial year –
(1) (2) (3) (4) (5) (6) (7) (8) Sr. No. CSR Project /Activity Sector in which the Locations Amount outlay Amount spent on Cumulative Amount spent identified Project is covered (budget) project or the projects or expenditure up to directly or through program wise programs the reporting period Implementing Agency 1. Education & Food Education & Health Kolkata Not Available ` 4,60,000/- ` 4,60,000/- Implementing Agency - for the children Care Ek Prayaas Educational from economically Society backward families
6. In Case the Company Has Failed to Spend 7. Responsibility Statement of the Corporate the Two Per Cent of the Average Net Profit Social Responsibility Committee of the Last Three Financial Years or any Part The implementation and monitoring of Corporate Social Thereof, the Company Shall Provide the Responsibility (CSR) Policy, is in compliance with CSR Reasons For Not Spending the Amount in its objectives and Policy of the Company. Board Report For and on behalf of the Board of Directors Apart from the funding the essential educational needs & The Mandhana Retail Ventures Limited health requirements for the underprivileged, the Company is (formerly known as Mandhana Retail Ventures Limited) also considering some other initiatives including employment enhancement skills for the economically deprived section of Sangeeta Mandhana Priyavrat Mandhana the society, helping small children/youngsters to fight with the Managing Director Executive Director dreadly disease like cancer, etc. In this regard, the Company DIN: 06934972 DIN: 02446722 is in dialogue with several registered Trusts and Societies to further its CSR objectives. Place: Mumbai Date: 28th May, 2018 32 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 33
ANNEXURE – ‘C’ to Directors’ Report NOMINATION AND REMUNERATION POLICY
1. Preamble 1.4.4. identifying persons who are qualified to become 1.1 The Mandhana Retail Ventures Limited (the ‘Company’) Directors and who may be appointed in senior recognizes the importance of attracting, retaining and management in accordance with the criteria laid motivating personnel of high calibre and talent for the purpose down, and recommend to the Board of Directors of ensuring efficiency and high standard in the conduct of their appointment and removal; and its affairs and achievement of its goals besides securing the confidence of the shareholders in the sound management of 1.4.5. whether to extend or continue the term of the Company. For the purpose of attaining these ends, the appointment of the Independent Director, on the Company has constituted a Nomination and Remuneration basis of the report of performance evaluation of Committee which is entrusted with the task of devising a Independent Directors transparent reasonable and fair policy of remuneration for its directors, key managerial personnel and other employees. 1.5 This Nomination and Remuneration Policy has been formulated with a view to: 1.2 The Companies Act, 2013 vide sub-section (3) of section 178, the Companies (Meetings of Board and its Powers) Rules, 1.5.1 devise a transparent system of determining the 2014 and Regulation 19 of the SEBI (Listing Obligations appropriate level of remuneration throughout all and Disclosure Requirements) Regulations, 2015 (“Listing levels of employees and teams in the Company; Regulations”) makes it mandatory for the Board of Directors of every listed company to constitute a Nomination and 1.5.2 encourage personnel to perform to their highest Remuneration Committee. level;
1.3 The objective of the Nomination and Remuneration 1.5.3 provide consistency in remuneration throughout Committee is to assist the Board of Directors of the Company the Company; and its controlled entities in fulfilling its responsibilities to shareholders by : 1.5.4 offer incentives on the premise of aligning the performance of the business with the performance 1.3.1. ensuring that the Board of Directors is comprised of key employees and teams within the Company; of individuals who are best able to discharge and the responsibilities of Directors in consonance with the Companies Act, 2013 and the norms of 1.5.5 set out the approach to diversity on the Board as corporate governance contained in the Companies delineated in the Annexure to this Policy. (Corporate Social Responsibility Policy) Rules, 2014; and 1.6 The Nomination and Remuneration Policy elucidates the types of remuneration to be offered by the Company and factors 1.3.2. ensuring that the nomination processes and to be considered by the Board of Directors of the Company, remuneration policies are equitable and Nomination and Remuneration Committee and Management transparent. of the Company in determining the appropriate remuneration policy for the Company. 1.4 The responsibilities of the Nomination and Remuneration Committee include: 1.7 The Nomination and Remuneration Policy applies to the Company’s senior management employees, including its Key 1.4.1. formulation of the criteria for determining managerial personnel and Board of Directors. qualifications, positive attributes and independence of a Director and recommend to the Board of 2. Definitions Directors a policy relating to, the remuneration of Some of the key terms used in the Nomination and the directors, Key managerial personnel and other Remuneration Policy are as under: employees; 2.1 ‘Board’ means the Board of Directors of The Mandhana 1.4.2. formulation of criteria for evaluation of performance Retail Ventures Limited or the Company. of independent directors and the Board of Directors; 2.2 ‘Committee’ means the Nomination and Remuneration 1.4.3. devising a policy on diversity of Board of Directors; Committee constituted by the Board of Directors of the Company in accordance with Section 178 of the Companies Act, 2013. 32 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 33
2.3 ‘Director’ means a Director appointed on the Board of The contract of employment/Letter of Appointment the Company including executive; non-executive; and may set out the expectations for the performance, the independent directors. key performance indicators, measures and criteria for assessment or evaluation of performance. 2.4 ‘Employee’ means every senior management employee, including Key managerial personnel and directors on the 4.3 The Committee and the Board shall approve the contracts Board. of employment/letter of appointment of directors and Key Managerial Personnel. For senior management 2.5 ‘Key managerial personnel’ includes managing employees, such appointments shall be considered and director, or Chief Executive Officer or manager and in approved by the Managing Director in consultation their absence, a whole-time director; company secretary; with Chief Executive Officer of the Company and brief and Chief Financial Officer. particulars of such appointment(s) made shall be placed before the Committee at regular intervals for its noting 2.6 ‘Member’ means a Director of the Company appointed and ratification. as member of the Committee. The Board shall disclose the terms and conditions of any 2.7 ‘Nomination and Remuneration Policy’ shall mean contract of employment / letter of appointment in accordance the policy of remuneration of Directors, Key managerial with the law. personnel and other employees of the Company determined by the Nomination and Remuneration 5. Remuneration Structure Committee. 5.1 R emuneration To Directors And Key Managerial PersonneL 2.8 ‘Senior management’ or ‘Senior management The Board shall, in consultation with the Committee employees’ means the personnel of the Company approve and finalize the forms of remuneration to be who are members of its core management team offered to Directors and Key managerial personnel. The excluding Board of Directors comprising all members remuneration package shall be composed of amounts of management one level below the Executive Directors, that are fixed and variable and the endeavour of the including the functional heads. Board and the Committee shall be to strike a balance between the fixed and variable components and thereby 3. Nomination and Remuneration Committee promote sustainable value for the Company and its 3.1 The Committee shall be formed by the Board of the shareholders over time. Company. It shall consist of three or more Non-Executive Directors out of which not less than one-half shall be 1 5.1. Fixed Remuneration Independent Directors. The Board of the Company shall The contract of employment / letter of appointment nominate Directors as Members of the Committee from entered into by the Executive Directors / Key managerial time to time. personnel with the Company shall demarcate the cost to the Company, fixed gross salary or base salary payable 3.2 The Chairman of the Committee shall be an Independent to the employee. The fixed remuneration or salary shall Director but shall not be the Chairperson of the Company. be determined according to complexities of the position He shall be present at the Annual General Meeting, to and role of the Executive Directors / Key managerial answer the shareholders’ queries and may determine as personnel, the relevant laws and regulations, conditions to who should answer the queries. prevalent in the labour market and the scale of the business relating to the position. The fixed remuneration 3.3 The presently nominated members of the Committee are : will reflect the core performance requirements and expectations of the Company. 1) Mr. Ramnath Pradeep (Chairman) 2) Mr. Pradip Dubhashi 5.1.2 Performance Based Remuneration or 3) Mr. Kiran Vaidya Incentive-Based Payments The performance-based or incentive-based payments 4. Letter of Appointment or Contract of may form part of the variable component of the salary Employment payable to the Executive Directors / Key managerial 4.1 The Company shall issue a Letter of Appointment to personnel. In addition to the fixed remuneration, the Non-Executive Directors setting out the terms and Company shall implement a system of bonuses and conditions, if any and the same shall be approved by the incentives reflecting short and long term performance Board in consonance to the provision of the Companies objectives appropriate to the working of the Company Act, 2013 and applicable Regulations of the Listing and designed to lay emphasis on the direct relationship Regulations and any amendments thereto. between performance and remuneration. Performance based remuneration shall be proportionate to and 4.2 Executive Directors, Key managerial personnel and contingent upon the attainment of specific performance senior management employees shall enter into a contract targets by Executive Directors / Key managerial with the Company or a Letter of Appointment shall be personnel in the Company. Incentive-based payments issued by the Company clearly setting out the terms and take into account factors such as performance of the conditions of the remuneration package for such person. Executive Directors / Key managerial personnel, his 34 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 35
conduct, responsibilities, position and role and shall be shares and convertible instruments held by non-executive calculated as a percentage of the fixed remuneration. directors shall be disclosed by the Company in its Annual Report. 5.1.3 Severance Fees or Termination Benefits Each contract of employment / letter of appointment 6.4 With regard to payment of remuneration, the section entered into by the Executive Directors and Key on the corporate governance of the Annual Report of managerial personnel with the Company may the Company shall contain the following disclosures, demarcate in advance the entitlement to payment upon namely : termination of employment for each employee. Making of such payments shall be approved by the Board and 6.4.1All elements of remuneration package of individual the Committee and shall be in consonance with the directors summarized under major groups, such as Nomination and Remuneration Policy of the Company. salary, benefits, bonuses, stock options, pension etc;
5.1.4 Employee Benefits 6.4.2 Details of fixed component and performance linked The Company shall comply with all legal and industrial incentives, along with the performance criteria; obligations in determining the benefits available with employees, namely short-term benefits such as salaries, 6.4.3 Service contracts, notice period, severance fees; and social security contributions, profit sharing and bonuses, post-employment benefits such as gratuity, pension 6.4.4Stock option details, if any - and whether issued at a retirement benefits, post-employment life insurance discount as well as the period over which accrued and and post-employment medical care other long-term over which exercisable. employee benefits, including long-service leave, long- term disability benefits and termination benefits. 7. Review and Implementation 7.1 The Managing Director in consultation with the Chief 5.2 Remuneration To Non-Executive Directors Executive Officer and the head of the Human Resource The Non-executive directors shall be paid sitting fees for department, shall conduct an evaluation of performance attending each of the Meetings of the Board of Directors for senior management employees and all the other and Committees as may be approved by the Board of employees who are two level below the Board, on an Directors from time to time. The Non-executive directors annual basis to monitor and review, and if necessary, may be paid commissions and other benefits as may be revise the appropriateness of each remuneration prescribed by the Board of Directors in conformity of the package and the summary of the evaluation will be applicable provisions of the Companies Act, 2013 and placed before the Committee for its approval. rules notified thereunder from time to time. 7.2 The Committee shall be responsible for monitoring the 6. Disclosures implementation of the Nomination and Remuneration 6.1 The Nomination and Remuneration Policy shall be Policy, conducting a review of the same from time to disclosed in the Board’s report of the Company prepared time and advising the Board on the mode of revision of in accordance with sub-section (3) of section 134 of the the policy such as inclusion of long-term incentives that Companies Act, 2013. would contribute towards creating a sustainable value for shareholders of the Company. 6.2 The Nomination and Remuneration Policy and the criteria for evaluation of performance or evaluation 8. Amendment criteria as laid down by the Committee shall be disclosed The Board of Directors reserves the right to amend or modify in the Annual Report of the Company. the Nomination and Remuneration Policy in whole or in part, at any time without assigning any reason whatsoever. 6.3 Payments to non-executive directors shall be either However, no such amendment or modification will be binding disclosed in the Annual Report of the Company or put on the employees, key managerial personnel and senior up on the website of the Company and reference drawn management employees unless the same is notified to them in thereto in the Annual Report. Further, the number of writing. 34 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 35
Annexure
Board Diversity Policy origin or ancestry, marital status, age, sexual orientation, or 1. Purpose any other personal or physical attribute which does not speak to such person’s ability to perform as a Board member. This Board Diversity Policy (‘Policy’) sets out the approach to diversity on the Board of Directors (‘Board’) of The Mandhana Retail Ventures Limited (‘TMRVL’/’the Company’). Accordingly, the Committee shall: • Assess the appropriate mix of diversity, skills, experience and 2. Scope expertise required on the Board and assess the extent to which This Policy applies to the Board. It does not apply to employees the required skills are represented on the Board; generally. • Make recommendations to the Board in relation to 3. Policy Statement appointments, and maintain an appropriate mix of diversity, TMRVL recognizes and embraces the importance of a diverse skills, experience and expertise on the Board, and Board in its success. TMRVL believes that a truly diverse Board will leverage differences in thought, perspective, knowledge, • Periodically review and report to the Board requirements, if skill, regional and industry experience, cultural and any, in relation to diversity on the Board. geographical background, age, ethnicity, race and gender, which will ensure that the Company retains its competitive The Board shall have an optimum combination of executive, advantage. non-executive and independent directors in accordance with requirements of the Articles of Association of the Company, the TMRVL believes that a diverse Board will contribute to the Companies Act, 2013, Listing Regulations and the statutory, achievement of its strategic and commercial objections, regulatory and contractual obligations of the Company. including to: The effective implementation of this Policy requires that shareholders • Drive business results; are able to judge for themselves whether the Board as constituted • Make corporate governance more effective; is adequately diverse. To this end, TMRVL shall continue to provide • Enhance quality and responsible decision making sufficient information to shareholders about the size, qualifications capability; and characteristics of each Board member. • Ensure sustainable development; and • Enhance the reputation of the Company. 4. Responsibility and Review The Committee will review this Policy periodically and The Nomination and Remuneration Committee (‘Committee’) recommend appropriate revisions to the Board. is responsible for reviewing and assessing the composition and performance of the Board, as well as identifying appropriately For and on behalf of the Board of Directors qualified persons to occupy Board positions. The Mandhana Retail Ventures Limited (formerly known as Mandhana Retail Ventures Limited) While all appointments to the Board will continue to be made on merit, the Committee will consider the benefits of diversity Sangeeta Mandhana Priyavrat Mandhana (including but not limited to the attributes listed above) in Managing Director Executive Director identifying and recommending persons for Board membership, DIN: 06934972 DIN: 02446722 as well as in evaluating the Board and its individual members. Place: Mumbai Date: 28th May, 2018 Further, the Committee will ensure that no person is discriminated against on grounds of religion, race, gender, pregnancy, childbirth or related medical conditions, national 36 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 37
ANNEXURE – ‘D’ to Directors’ Report
SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2018 [Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To, (b) SEBI (Prohibition of Insider Trading) Regulations, 2015; The Members, The Mandhana Retail Ventures Limited (c) The SEBI (Issue of Capital and Disclosure Requirements) (formerly Mandhana Retail Ventures Limited) Regulations, 2009; (Not applicable to the Company 006-008, Peninsula Centre, during the Audit Period) Dr. S.S. Rao Marg, Parel, Mumbai 400 012 (d) The SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; I have conducted the secretarial audit of the compliance of (Not applicable to the Company during the Audit applicable statutory provisions and the adherence to good Period) corporate practices by The Mandhana Retail Ventures Limited (hereinafter called ‘the company’). Secretarial Audit was conducted (e) The SEBI (Issue and Listing of Debt Securities) Regulations, in a manner that provided me a reasonable basis for evaluating 2008; (Not applicable to the Company during the the corporate conducts/ statutory compliances and expressing my Audit Period) opinion thereon. (f) The SEBI (Registrars to an Issue and Share Transfer Based on my verification of the Company’s books, papers, minute Agents) Regulations, 1993 regarding the Companies Act books, forms and returns filed and other records maintained by the and dealing with client; Company and also the information provided by the Company, its officers, agents and authorised representatives during the conduct (g) The SEBI (Delisting of Equity Shares) Regulations, 2009; of secretarial audit, I hereby report that in my opinion, the company (Not applicable to the Company during the Audit has, during the audit period covering the financial year ended Period) and on March 31, 2018 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes (h) The SEBI (Buyback of Securities) Regulations, 1998; and compliance-mechanism in place to the extent, and in the (Not applicable to the Company during the Audit manner reported hereinafter: Period)
I have examined the books, papers, minute books, forms and (vi) The Management has identified and confirmed the following returns filed and other records maintained by the Company for laws as specifically applicable to the Company: the financial year ended on March 31, 2018 according to the provisions of: I. The Legal Metrology Act, 2009
(i) The Companies Act, 2013 (the Act) and the Rules made under II. The Trade Mark Act, 1999 that Act; I further report that for the compliance of Labour Laws and (ii) The Securities Contracts (Regulations) Act, 1956 (‘SCRA’) and other General Laws, my examination and reporting is based on the Rules made under that Act; the documents, records as produced and shown to me and the information and explanation as provided to me, by the officers (iii) The Depositories Act, 1996 and the Regulations and Bye-laws and management of the Company and to the best of my judgment framed under that Act; and understanding of the applicability of the different enactments upon the Company, in my opinion there are adequate systems and (iv) The Foreign Exchange Management Act, 1999 and the Rules processes exist in the Company to monitor and ensure compliance and Regulations made thereunder to the extent applicable to with applicable General Laws and Labour Laws. Foreign Direct Investment (FDI), Overseas Direct Investment (ODI) and External Commercial Borrowings (ECB); I further report that the Company has complied with the applicable clauses/regulations of the following: (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India (SEBI) Act, 1992: (i) Secretarial Standards with regards to Meeting of Board of Directors (SS-1) and General Meetings (SS-2) issued by The (a) The SEBI (Substantial Acquisition of Shares and Institute of Company Secretaries of India; Takeovers) Regulations, 2011; 36 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 37
(ii) The Equity Listing Agreement, to the extent applicable, entered meeting and for meaningful participation at the meeting. in to by Company with National Stock Exchange of India Limited and BSE Limited; and Securities and Exchange Board All decisions at Board Meetings and Committee Meetings are of India (Listing Obligations and Disclosure Requirements) carried out unanimously as recorded in the minutes of the meetings Regulations, 2015. of the Board of Directors or Committee of the Board, as the case may be. During the period under review and as per the explanations and clarifications given to me and the representations made by the I further report that there are adequate systems and processes Management, the Company has complied with the provisions of in the company commensurate with the size and operations of the the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned company to monitor and ensure compliance with applicable laws, above subject to the following observations: rules, regulations and guidelines.
During the period under review, the Company has spent only a I further report that during the audit period; part of the amount eligible to be spent on Corporate Social Responsibility. i. Mr. Manish Mandhana was appointed as the Chief Executive Officer w.e.f. 1st April, 2017, Ordinary I further report that Resolution through Postal Ballot.
The Board of Directors of the Company is duly constituted with ii. Mr. Hemant Gupta was appointed as Chief Financial proper balance of Executive Directors, Non-Executive Directors Officer and Chief Operating Officer w.e.f. 26th March, and Independent Directors. The changes in the composition of the 2018. Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Date: 23rd May, 2018 (NITIN R. JOSHI) Place: Mumbai FCS No. 3137 C.P. No 1884 Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent in Note: This report is to be read with our letter of even date which advance, and a system exists for seeking and obtaining further is annexed as Annexure and forms an integral part of this report. information and clarifications on the agenda items before the
Annexure to Secretarial Audit Report
To, The Members, The Mandhana Retail Ventures Limited (formerly Mandhana Retail Ventures Limited) 006-008, Peninsula Centre, Dr. S.S. Rao Marg, Parel, Mumbai 400 012
Our report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit.
2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the company.
4. Wherever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management has conducted the affairs of the company.
Date: 23rd May, 2018 (NITIN R. JOSHI) Place: Mumbai FCS No. 3137 C.P. No 1884 38 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 39
ANNEXURE – ‘E’ to Directors’ Report
FORM NO. MGT 9 EXTRACT OF ANNUAL RETURN As on financial year ended on 31st March, 2018 Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12 (1) of the Company (Management & Administration) Rules, 2014.
I. Registation & Other Details : i. CIN L52390MH2011PLC213349 Registration Date 12th February, 2011 Name of the Company The Mandhana Retail Ventures Limited (Formerly Mandhana Retail Ventures Limited) Category / Sub-category of the Company Company Limited by Shares / Indian/ Non-Government Company. Address of the Registered Office & Contact Details Plot No. E-132, MIDC, Tarapur Industrial Area Boisar, Dist : Palghar – 401 506 Tel : 91-2525-605706/272426 Fax : 91-22-43539358 ii. Address of the corporate Office & Contact Details 006-008, Peninsula Centre, Dr. S. S. Rao Road, Parel, Mumbai – 400 012 Tel.: 91-22-43539191 Fax: 91-22-43539216 email : [email protected] Web : www.mandhanaretail.com iii. Whether Listed Company Yes (BSE Limited & National Stock Exchange of India Limited) iv. Name, Address & contact Details of the Registrar & Link Intime India Private Limited Transfer Agent, if any. (Unit: The Mandhana Retail Ventures Ltd.) C-101, 247 Park, L.B.S. Marg, Vikhroli (West) Mumbai – 400 083 Tel: 91-22-49186000 Fax : 91-22-49186060 email : [email protected]
II Principal Business Activities of The Company: All the business activities contributing 10% or more of the total turnover of the Company are given below:-
Sr. Name & Description of main product / services NIC Code of the Product / Service* % to total turnover of the Company # No. 1 Retail Sale of Clothing 477 100
*As per National Industrial Classification - Ministry of Statistics and Programme Implementation # On the basis of Gross Turnover
III Particulars of Holding, Subsidiary & Associate Companies: The Company does not have any Holding/ Subsidiary / Associate Company. 38 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 39
IV Shareholding Pattern (Equity Share Capital. Break up as % to total Equity) (i) Category-wise Shareholding No of Shares held at the beginning of the year No of Shares held at the end of the year % Change (01.04.2017) (31.03.2018) During Category of shareholders Demat Physical Total % of Total Demat Physical Total % of Total the Shares@ Shares@ year@ A. Promoters (1) Indian : a) Individual/HUF 59,72,431 - 59,72,431 27.05 49,07,431 - 49,07,431 22.22 -4.83 b) Central Government/ State ------Government c) FI / Banks ------d) Bodies Corporate 9,98,522 - 9,98,522 4.52 9,98,522 - 9,98,522 4.52 - e) Any other – Relative of Promoters 25,13,729 - 25,13,729 11.38 24,30,590 - 24,30,590 11.01 -0.37 Sub-Total (A)(1) 94,84,682 - 94,84,682 42.95 83,36,543 - 83,36,543 37.75 -5.20 (2) Foreign : a) Individual (NRI/ Foreign Individual) ------b) Government ------c) Institutions ------d) Foreign Portfolio Investor ------e) Any other ------Sub-Total (A)(2) ------Total Shareholding of Promoter 94,84,682 0 94,84,682 42.95 83,36,543 - 83,36,543 37.75 -5.20 and Promoter Gr.(A)=(A)(1)+(A)(2) B. Public Shareholding (1) Institutions : a) Mutual Funds ------b) Venture Capital Funds ------c) Alternate Investment Funds ------d) Foreign Venture Capital Investors ------e) Foreign Portfolio Investor 6,31,315 - 6,31,315 2.86 6,58,374 - 6,58,374 2.98 0.12 f) Financial Institutions/ Bank 4,62,098 - 4,62,098 2.09 4,61,225 - 4,61,225 2.09 - g) Insurance Companies ------h) Provident Funds/ Pension Funds ------i) Any other ------Sub-Total (B)(1) 10,93,413 - 10,93,413 4.95 11,19,599 - 11,19,599 5.07 0.12 (2) Central Government / State ------Government(s)/ President of India Sub-Total (B)(2) ------(3) Non Institutions: a) Individual Individual Shareholders holding Nominal 21,67,060 4,945 21,72,005 9.84 29,30,116 2,213 29,32,329 13.28 3.44 share Capital up to ` 1 lakh Individual Shareholders holding Nominal 56,92,418 - 56,92,418 25.78 56,90,675 - 56,90,675 25.77 -0.01 share Capital in Excess of ` 1 lakh b) NBFCs registered with RBI ------c) Employees Trusts ------d) Overseas Depositories ------(holding DRs) (balancing figure) e) Any Other (Specify): 36,40,091 - 36,40,091 16.48 40,03,463 - 40,03,463 18.13 1.65 H.U.F. 5,18,526 - 5,18,526 2.35 4,62,228 - 4,62,228 2.09 -0.26 NRI-Non-Repat 40,597 - 40,597 0.18 64,806 - 64,806 0.29 0.11 Other Directors 35,333 - 35,333 0.16 35,333 - 35,333 0.16 - NRI-Repat 1,18,405 - 1,18,405 0.54 3,01,037 - 3,01,037 1.36 0.82 Clearing Member 2,35,333 - 2,35,333 1.07 2,02,680 - 2,02,680 0.92 -0.15 Bodies Corporate 26,91,897 - 26,91,897 12.19 29,37,379 - 29,37,379 13.31 1.12 Sub-Total (B)(3) 1,14,99,569 4,945 1,15,04,514 52.1 1,26,24,254 2,213 1,26,26,467 57.18 5.08 Total Public shareholding 1,25,92,982 4,945 1,25,97,927 57.05 1,37,43,853 2,213 1,37,46,066 62.25 5.20 (B)=(B)(1)+(B)(2)+(B)(3) C. Shares held by Custodian for GDRs ------& ADRs Grand Total = (A + B + C) 2,20,77,664 4,945 2,20,82,609 100 2,20,80,396 2,213 2,20,82,609 100 - @The figures have been rounded off to two decimal places and the same represent percentage (%) shareholding vis-a-vis the paid up capital of the Company, on such particular day. 40 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 41
(ii) Shareholding of Promoters: Shareholding at the beginning of the year Shareholding at the end of the Year (01.04.2017) (31.03.2018) % Change in Sr. % of Shares % of Shares Shareholding % of Total % of Total Name Pledged/ Pledged/ No. Shares No. of Shares during the No. of Shares Encumbered Encumbered of the Shares of the year@ to Total to Total Company@ Company@ shares shares 1 Mr. Purushottam C. Mandhana 13,33,333 6.04 90 10,56,333 4.78 87.38 -1.26 2 Mr. Priyavrat Mandhana 11,19,894 5.07 62.78 11,19,894 5.07 62.78 - 3 Mr. Biharilal C. Mandhana 10,99,666 4.98 75.75 8,99,666 4.07 70.36 -0.91 4 Mr. Manish Mandhana 13,86,206 6.28 86.08 11,48,206 5.2 82.58 -1.08 5 Mr. Purushottam C. Mandhana (HUF) 10,33,332 4.68 83.87 6,83,332 3.09 75.61 -1.59
@The figures have been rounded off to two decimal places and the same represent percentage (%) shareholding vis a vis the paid up capital of the Company, on such particular day.
(iii) Change in Promoters shareholding:
Shareholding at the Cumulative shareholding Sr. beginning of the year during the year Name No. No. of Shares % of Total Shares of No. of Shares % of Total Shares the Company@ of the Company@ 1 Mr. Purushottam C. Mandhana At the beginning of the year 13,33,333 6.04 13,33,333 6.04 27.09.2017- Invocation by Pledgee (2,77,000) 1.26 10,56,333 4.78 At the end of the year - - 10,56,333 4.78
2 Mr. Priyavrat Mandhana At the beginning of the year 11,19,894 5.07 11,19,894 5.07 Changes during the year - - - - At the end of the year - - 11,19,894 5.07
3 Mr. Biharilal C. Mandhana At the beginning of the year 10,99,666 4.98 10,99,666 4.98 27.09.2017- Invocation by Pledgee (2,00,000) 0.91 8,99,666 4.07 At the end of the year - - 8,99,666 4.07
4 Mr. Manish Mandhana At the beginning of the year 13,86,206 6.28 13,86,206 6.28 27.09.2017- Invocation by Pledgee (2,23,000) 1.01 11,63,206 5.27 15.12.2017- Invocation by Pledgee (15,000) 0.07 11,48,206 5.2 At the end of the year - - 11,48,206 5.2
5 Mr. Purushottam C. Mandhana (HUF) At the beginning of the year 10,33,332 4.68 10,33,332 4.68 15.09.2017- Invocation by Pledgee (2,00,000) 0.91 8,33,332 3.77 18.09.2017- Invocation by Pledgee (1,50,000) 0.68 6,83,332 3.09 At the end of the year - - 6,83,332 3.09
@The figures have been rounded off to two decimal places and the same represent percentage (%) shareholding vis a vis the paid up capital of the Company, on such particular day 40 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 41
(iv) Shareholding Pattern of Top 10 Shareholders (other than Directors, Promoters & Holders of GDRs & ADRs): (as at the respective date of weekly beneficiary position) Shareholding at the Cumulative shareholding Sr. beginning of the year during the year For each of the Top 10 Shareholders No. No. of Shares % of Total Shares of No. of Shares % of Total Shares the Company@ of the Company@ 1. Mr. Rakesh Jhunjhunwala At the beginning of the year 28,13,274 12.74 28,13,274 12.74 At the end of the year - - 28,13,274 12.74 2. Mentor Capital Limited At the beginning of the year - - - - 29.09.2017 Market Purchase 6,60,234 2.99 6,60,234 2.99 06.10.2017 Market Purchase 50,615 0.22 7,10,849 3.21 13.10.2017 Market Purchase 24,951 0.11 7,35,800 3.33 27.10.2017 Market Purchase 450 0.00 7,36,250 3.33 08.12.2017 Market Purchase 19,000 0.09 7,55,250 3.42 15.12.2017 Market Purchase 1,79,135 0.81 9,34,385 4.23 22.12.2017 Market Sale (972) 0.00 9,33,413 4.23 29.12.2017 Market Purchase 11,000 0.05 9,44,413 4.28 12.01.2018 Market Sale (32,919) 0.15 9,11,494 4.13 At the end of the year - - 9,11,494 4.13 3. Auburn Limited At the beginning of the year 5,74,649 2.60 5,74,649 2.60 At the end of the year - - 5,74,649 2.60 4. Life Insurance Corporation of India At the beginning of the year 4,38,887 1.99 4,38,887 1.99 At the end of the year - - 4,38,887 1.99 5. Vimesh Zaveri - - - - At the beginning of the year 16.03.2018 Market Purchase 1,15,000 0.52 1,15,000 0.52 31.03.2018 Market Purchase 1,07,000 0.49 2,22,000 1.01 At the end of the year - - 2,22,000 1.01 6. Mr. Ramesh Damani At the beginning of the year 2,27,987 1.03 2,27,987 1.03 26.05.2017 Market Sale (6,237) 0.02 2,21,750 1.01 03.11.2017 Market Sale (4,018) 0.02 2,17,732 0.99 At the end of the year - - 2,17,732 0.99 7. Jamish Investment Pvt. Ltd. At the beginning of the year 2,01,960 0.91 2,01,960 0.91 At the end of the year 2,01,960 0.91 8. Rajasthan Global Securities Pvt. Ltd. At the beginning of the year 61,996 0.28 61,996 0.28 14.04.2017 Market Purchase 5,000 0.02 66,996 0.30 28.04.2017 Market Purchase 5,000 0.02 71,996 0.32 19.05.2017 Market Purchase 8,335 0.04 80,331 0.36 26.05.2017 Market Purchase 32,255 0.15 1,12,586 0.51 30.06.2017 Market Purchase 5,000 0.02 1,17,586 0.53 13.10.2017 Market Sale (11,927) 0.05 1,05,659 0.48 15.12.2017 Market Purchase 37,006 0.17 1,42,665 0.65 09.02.2018 Market Purchase 14,324 0.06 1,56,989 0.71 16.02.2018 Market Purchase 4,428 0.02 1,61,417 0.73 02.03.2018 Market Purchase 2,829 0.01 1,64,246 0.74 09.03.2018 Market Purchase 16,870 0.08 1,81,116 0.82 16.03.2018 Market Purchase 19,164 0.09 2,00,280 0.91 At the end of the year - - 2,00,280 0.91 9. Mr. Nimish Chandulal Shah At the beginning of the year 1,84,667 0.84 1,84,667 0.84 21.07.2017 Market Purchase 32,500 0.14 2,17,167 0.98 04.08.2017 Market Sale (40,000) 0.18 1,77,167 0.80 22.09.2017 Market Sale (15,000) 0.07 1,62,167 0.73 At the end of the year - - 1,62,167 0.73 10 Munas Investment Pvt. Ltd At the beginning of the year 1,56,626 0.71 1,56,626 0.71 At the end of the year - - 1,56,626 0.71
@The figures have been rounded off to two decimal places and the same represent percentage (%) shareholding vis a vis the paid up capital of the Company, on such particular day. Date of purchase/sale has been considered as the date on which the beneficiary position was provided by the RTA to the Company. 42 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 43
(v) Shareholding of Directors & Key Managerial Personnel (KMP):
Shareholding at the Cumulative shareholding Sr. beginning of the year during the year For each of the Directors & KMP No. No. of Shares % of Total Shares of No. of Shares % of Total Shares the Company@ of the Company@ 1. Mr. Priyavrat Mandhana At the beginning of the year 11,19,894 5.07 11,19,894 5.07 At the end of the year 11,19,894 5.07 2. Mrs. Sangeeta Mandhana At the beginning of the year 79,820 0.36 79,820 0.36 At the end of the year 79,820 0.36 3. Mr. Sachin Jaju At the beginning of the year 35,333 0.16 35,333 0.16 At the end of the year 35,333 0.16 4. Mr. Pradip Dubhashi At the beginning of the year - - - - At the end of the year - - 5. Mr. Ramnath Pradeep At the beginning of the year - - - - At the end of the year - - 6. Mr. Kiran Vaidya At the beginning of the year - - - - At the end of the year - - 7. Mr. Manish Mandhana At the beginning of the year 13,86,206 6.28 13,86,206 6.28 27.09.2017- Invocation by Pledgee (2,23,000) 1.01 11,63,206 5.27 15.12.2017- Invocation by Pledgee (15,000) 0.07 11,48,206 5.20 At the end of the year 11,48,206 5.20 8. Mr. Virendra Varma At the beginning of the year - - - - At the end of the year - - 9. Mr. Hemant Gupta* At the beginning of the year - - - - At the end of the year - -
@ The figures have been rounded off to two decimal places and the same represent percentage (%) shareholding vis a vis the paid up capital of the Company, on such particular day. * Mr. Hemant Gupta was appointed as the CFO & COO of the Company w.e.f. 26th March, 2018.
V. Indebtedness: Indebtedness of the Company including interest outstanding/accrued but not due for payment (Amt in `) Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness Term loan Working Capital Indebtedness at the beginning of the financial year i) Principal amount 21,256,000 59,120,092 - - 80,376,092 ii) Interest due but not paid 439,471 - - - 439,471 iii) Interest accrued but not due - - - - - Total = (i+ii+iii) 21,695,471 59,120,092 - - 80,815,563 Change in Indebtedness during the financial year Additions - 15,925,489 45,000,000 - 60,925,489 Reduction 21,695,471 - 45,000,000 - 66,695,471 Net Change (21,695,471) 15,925,489 - - (5,769,982) Indebtedness at the end of the financial year i) Principal amount - 75,045,581 - - 75,045,581 ii) Interest due but not paid - - - - - iii) Interest accrued but not due - - - - - Total = (i+ii+iii) - 75,045,581 - - 75,045,581 42 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 43
VI. Remuneration of Directors and Key Managerial Personnel A. Remuneration to Managing Director, Whole time Director and/ or Manager : (Amt in `)
Name of the MD/WTD/Manager Total Amount Sr. Particulars of Remuneration Sangeeta Mandhana Priyavrat No. Mandhana
1 Gross Salary a) Salary as per provisions contained in Section 17(1) of the Income Tax, 1961# 82,93,418 82,93,418 1,65,86,836 b) Value of perquisites under Section 17(2) of the Income Tax Act, 1961 - - - c) Profits in lieu of salary under section 17(3) of the Income Tax, 1961 - - - 2 Stock Option - - - 3 Sweat Equity - - - 4 Commission - - - ` - As % of profit - - - - Others (Specify) - - - 5 Others - Specify - - - Total ( A ) 82,93,418 82,93,418 1,65,86,836 Ceiling as per the Act ` 177.17 Lakh (Being 10% of the net profits of the Company calculated as per Sections 197 and 198 of the Companies Act, 2013)
#During the financial year 2017-18, Mrs. Sangeeta Mandhana and Mr. Priyavrat Mandhana was paid remuneration of ` 8,34,560/- per month (inclusive of Company’s contribution to Provident Fund). In view of limits provided under the provisions of Section 197 of the Companies Act, 2013, the excess remuneration of ` 13,06,582/- each was refunded by Mrs. Sangeeta Mandhana and Mr. Priyavrat Mandhana. B. Remuneration to other Directors: (Amt in `) Name of the Directors Total Amount Particulars of Remuneration Pradip Dubhashi Ramnath Pradeep Kiran Vaidya Sachin Jaju a) Fees for Attending Board / Committee Meetings 5,50,000 5,75,000 5,25,000 1,50,000 18,00,000 b) Commission - - - - - c) Others-Specify - - - - - Total (B) 5,50,000 5,75,000 5,25,000 1,50,000 18,00,000 Total Managerial remuneration (A+B)@ 1,65,86,836 Overall Ceiling as per the Act ` 194.88 Lakh (Being 11% of the net profits of the Company calculated as per Section 197 and 198 of the Companies Act, 2013)
@Sitting fees paid is within the limit of `1,00,000/- per meeting as prescribed under the Act. Sitting fees has not been considered under ‘Total Managerial Remuneration (A+B)’ in view of Section 197(2) of the Act. 44 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 45
C. R emuneration to Key Managerial Personnel (other than Managing Director/Joint Managing Director/ Whole Time Director/Manager):
(Amt in `) Key Managerial Personnel Sr. Mr. Manish Mr. Virendra *Mr. Hemant Gupta Particulars of Remuneration Mandhana Varma, Chief Financial No. Chief Executive Company Secretary Officer & Chief Officer Operating Officer 1 Gross Salary a) Salary as per provisions contained in Section 17(1) of the Income Tax, 1961 96,00,000 11,54,520 - b) Value of perquisites under Section 17(2) of the Income Tax Act, 1961 - - - c) Profits in lieu of salary under section 17(3) of the Income Tax, 1961 - - - 2 Stock Option - - - 3 Sweat Equity - - - 4 Commission - - - - As % of profit - - - - Others (Specify) - - - 5 Others - Specify - - - Total 96,00,000 11,54,520 -
Mr. Hemant Gupta was appointed as the CFO & COO of the Company w.e.f. 26th March, 2018. Mr. Gupta resumed the services w.e.f. 2nd April, 2018 and thereby payment of remuneration was not applicable to him for the financial year 2017-18.
VII. Penalties/Punishment/Compounding of Offences: There were no penalties/ punishment/compounding of offences for breach of any section of the Companies Act against the Company or its Directors or other offices in default, if any, during the year.
For and on behalf of the Board of Directors The Mandhana Retail Ventures Limited (formerly known as Mandhana Retail Ventures Limited)
Sangeeta Mandhana Priyavrat Mandhana Managing Director Executive Director DIN: 06934972 DIN: 02446722
Place: Mumbai Date: 28th May, 2018 44 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 45
Management Discussion and Analysis
Your company’s business model is to design, produce and sell Ratings, however, believes that the Indian economy is finally on a branded apparel and accessories for men and women in India recovery path from the twin shocks of demonetization and GST, and abroad. We have established a niche position in the Indian which had temporarily derailed growth. India’s economic growth branded apparel market with our brand ‘Being Human’. This brand rate had rebounded in third quarter of FY2018 and the superior is a part of a charity organization founded by one of India’s most growth trajectory is expected to continue going forward. famous icons Mr. Salman Khan. The charity is doing great work in the healthcare and education space and customer surveys suggest In May 2018, The International Monetary Fund (IMF) reaffirmed wide recall and loyalty. The brand’s motto of ‘doing good while that India will be the fastest growing major economy in 2018, with looking good’ is emboldened by our over half a million loyal a growth rate of 7.4 per cent. This growth rate is expected to rise customers. to 7.8 per cent in 2019 with the country’s medium-term prospects remaining positive. The IMF’s Asia and Pacific Regional Economic Towards the end of FY2018, your company released its updated Outlook report said that India’s economic recovery would be business strategy focused towards creating shareholder value. This underpinned by a rebound from transitory shocks as well as robust multi-pronged strategy concentrates on strengthening the business private consumption. model while moving towards value retail by creating a strong pipeline of new products. Retail Sector in India According to the several industry experts, India is the world’s fifth- Indian Economic Scenario largest global destination in the retail space. The Indian retail industry FY2018 has been an interesting year for the Indian economy with accounts for over 10 per cent of the country’s Gross Domestic significant policy implementations that have changed the way we Product (GDP) and around 8 per cent of the total employment. do business. At the beginning of FY18, while the country was just India’s retail market is expected to increase by 60 per cent to reach beginning to come out of the shock of demonetization, both in US$ 1.1 trillion by 2020, on the back of factors like rising incomes terms of economic processes as well as dampening of demand and lifestyle changes by the middle class coupled with increased sentiments, implementation of the landmark Goods and Services digital connectivity. India is also expected to become the world’s Tax (GST) appeared as an apparent headwind. After growing at fastest growing e-commerce market, driven by robust investment a steady pace in the first quarter of 2017, the Indian economic in the sector and rapid increase in the number of internet users. growth rates plunged to a three year low of 5.7 per cent due to a Indian e-commerce sales are expected to reach US$ 120 billion by slowdown in consumer spending and exports. Ratings agency India FY2020 from US$ 30 billion in FY2016. 46 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 47
The Retail Sector Market Size in India Company Positioning 1400 1,300 The Mandhana Retail Fashion Limited (“TMRVL”) is a leading brand 1200 apparel companies in the country. We hold the exclusive brand 1000 800 license for manufacturing and retailing of apparels for the “Being 600 672 700 600 518 490 534 Human” brand. Despite being a fairly young brand, your company 400 has grown significantly and is considered one of the leading men’s 200 0 apparel brands in India. 2012 2013 2014 2015 2016 2017 2020E TMRVL primarily focuses on the mid-to-premium segment and Source: BCG Retail 2020, Ernst and Young, Deloitte, indiaretailing.com, Economist caters largely to the Urban Mass and Urban Middle consumers in Intelligence Unit, Euro monitor India. Apparel design, quality, distribution and branding are done in-house while production of apparels has been handed over to Industry Experts estimate that branded apparel retail, in India, select trusted vendors. Apparel sales are done through Exclusive will grow at 1.5 times of the GDP growth rate over the next ten Brand Outlets (EBOs), Shop-in-Shops (SIS), Franchisee outlets, years. The sector is however undergoing a significant transition distributors and via e-commerce channels. This model allows us to with consumer taste and preferences changing at a rapid pace. remain ‘asset-light’ in nature. There is also a vast difference in the consumer behavior amongst various cities in the country. Consumers in emerging cities behave We follow an “Asset Light” business policy and hence don’t own differently from the big-city consumers as they have a strong any premises but lease them for EBOs. The premises for franchisee value-for-money orientation, significant local affinity, and a more outlets are largely owned or leased by the franchisee partners conservative financial outlook. themselves. The SIS counters are placed in multi-brand outlets and department stores operated by well-known names in retailing. The strong growth outlook of Indian retail is also prompting many leading global retailers to enter India. Several domestic and Domestic Brand Presence: international fashion brands are now expanding their operations in As on As on the country to tap into this burgeoning market of fashion, apparel Point of Sale 31st March, 2017 31st March, 2018 and footwear in the country with a diverse and personalized offering. Exclusive Brand Outlets 29 34 (EBOs) Currently, men’s apparel holds 41.7 per cent share of the Indian Shop In Shops (SIS) 351 372 apparel market followed by women’s apparel at 37.5 per cent and Franchisee 24 27 kids wear at 20.8 per cent, according to India Business of Fashion Distributors 10 7 report 2018. It is estimated that over the next decade, women’s E- Commerce (E-Comm) 4 3 wear and kids wear will demonstrate a high CAGR of 9.9 per cent Total Domestic Sales 418 443 and 10.5 per cent respectively, resulting in a rise in market share of these categories. Both, men’s wear and women’s wear is expected to contribute 39 per cent each to the total market in 2026, with kids wear accounting for the rest 22 per cent.
Segment wise Revenue Statement: (` In Lakh) Particulars EBO SIS Franchisee Distributors E-Comm Others Domestic Export Total Net Sales 6,008 9,815 3,659 555 2,122 359 22,518 3,196* 25,703 Gross Profit (GP) 3,832 6,101 2,275 322 1,319 (198) 13,650 1,213 14,863 GP ( % ) 63.78 62.16 62.16 58.11 62.16 -55.35 60.62 35.40 57.29 Profit Before Tax 1,551 1,551 Income Tax 648 648 Profit After Tax (PAT) 903 903 PAT ( % ) 3.48 3.48 * Excluding export benefit
Point of Sales Digital Footprints In the overall India growth story, Tier II and III cities offer much One of the key changes in our business strategy has been to higher avenues for growth. Consumers in these cities have a increase our digital footprint. We realised early on that digital high aspirational value, they are willing to spend a larger chunk media will play a key role in influencing consumer preferences and of their income on food, shopping and entertainment and hence, that this impact will be both broad and deep. We have, therefore, provide a large untapped potential. In order to capitalise on this decided to expand our online presence and have now collaborated large consumer segment, we have strategically shifted our focus with leading online retailers like Cloudtail and Jabong. Additionally, on expanding our footprint in these emerging Indian cities. During we are exploring various other e-commerce opportunities with the year, we opened Ten (10) new stores in Jodhpur, Thane, appropriate partners. Your company is also exploring the possibility Ranchi, Siliguri, Surat, Bangalore, Jaipur (2 stores), Chennai and of launching its exclusive e-commerce platform at an appropriate Coimbatore, out of which Six (6) were EBOs and Four (4) were time in the future. franchisees. During the year, 5 new store were opened in Fiji. 46 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 47
E-Commerce Sales in FY 2017-18: During the year under review your Company achieved the sales of Particulars Rupees in Lakh ` 25,958.80 lakh, reflecting a marginal decline of approximately Net Sales 2,122 0.05% over the last fiscal year, primarily on account of higher Sales % - Global 8% discounts offered by the Company. EBIDTA margin also decreased Sales % - Domestic 9% to 8% vis-à-vis 11%. In the previous year. The net profit after tax Gross Profit (GP) 1,319 for the year stood at ` 903 lakh as compared to ` 1,398 lakh in GP ( % ) 62.16 the previous year. Performance Review FY2019’S Updated Business Strategy FY2018 was a challenging year for your company. Apparel retailers Your company has updated its business strategy for the next had to advance their regular end-of-season sales to early-June, financial year, which is largely focused towards creating long term from mid-July, to clear out stocks before GST rolled out in order to shareholder value. This multi-pronged strategy concentrates on avoid imposition of transition rules. We also had to offer a higher- strengthening the business model while moving towards value retail than-usual discount to ensure that minimum inventory remained at by creating a strong pipeline of new products. the onset of GST’s implementation. As you know, our license agreement with the Being Human FY2018 was also the first full year of IND-AS implementation, which Foundation for being their exclusive brand partner holds strong was a significant accounting change. Prior to the implementation until March 2020. However, the company is already in process of of IND-AS, sales returns were accounted on an actual basis and renewing the licensing deal with the Foundation, which is expected revenue was accordingly adjusted. Specifically in our case, the to conclude in the current financial year itself. company follows two seasons and accordingly sales returns were received only once the season was over i.e. at the end of quarter In addition, the company is aiming for wider product outreach two and quarter four. As a result, the topline in those quarters was by working with various distributors. The aim is to create a strong not entirely reflective of the actual performance of the period. foothold in India’s Tier II and Tier III cities in order to leverage the Under the IND-AS policy, we have started adjusting sales return increased urbanization and disposable incomes of TMRVL’s target on an accrual basis. Provisions have been made every quarter for audience. We are concentrating on catering to the aspirational expected returns, which were reflected in the revenues; thereby market of emerging city consumers who have a strong value-for- giving a more realistic picture of that quarter’s performance. money orientation, significant local affinity, and a more conservative Historically, the company’s sales returns have been 10%-12%. This financial outlook. update in the accounting policy has also managed to reduce the mismatch on the cashflows. TMRVL is aggressively working towards creating a ‘core or basic line’ of products that will be targeted towards the fast fashion, Following table depicts the Profit of the Company for the last 3 value-for-money deals in the mid-to-premium segment of branded financial years: apparels. In order to improve the sales growth going forward, the (` in Lakh, except earnings per share) company is exploring multiple new sales channels. This will help Year ended the brand to reach out to a much wider base of audiences as well Particulars 31.03.2018* 31.03.2017* 31.03.2016# as improve our visibility. Total Income from 26,073.71 26,136.18 21,935.58 Operations The core management team is putting all of its efforts towards Net Profit for the period 1,551.14 2,282.14 3,276.17 targeting an EBITDA margin of 13-14% going forward by improving before tax its outsourcing practices. Finally, TMRVL is introducing various sales Net Profit / (Loss) for the 902.72 1,397.98 2,141.54 schemes and employee training courses in order to improve the period after tax Total Comprehensive 913.10 1,407.25 2,141.54 same-store-sales growth for FY19. Income for the period (Comprising Profit / (Loss) Human Resource Management for the period (after tax) Your company strongly believes that its employees are its biggest and Other Comprehensive assets and have played a major role in it growth. The Company Income (after tax) Equity Share Capital 2208.26 2208.26 5.00 continues to take initiatives that will enhance the operational Reserves (excluding 4,533.78 3,620.68 6,357.99 capabilities of employes and thus, develop a firm platform for Revaluation Reserve) as future growth. We place significant emphasis on the recruitment shown in the Audited and retention process of personnel. Balance Sheet of the previous year We believe in inclusive growth and being an employer of choice. Earnings Per Share 4.09 6.33 9.70 All our stores employs specially abled people, who are amongst (of `10/- each) our top achievers. Your company believes that a strong focus on *Based on IND-AS. training and development is important for the sustenance and #Based on IGAAP growth of the business and hence a strong emphasis is given to the same. As on 31st March, 2018, the employee base stands at 656. 48 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 49
During the financial year 2017-18 following trainings were provided to employees of the Company: No. of Employees Sr.No Details of Learning Objective of Training Covered 1 Email Etiquettes To help employees to follow a uniformity in communicating via 75 emails both internally & externally. 2 Basics of Retail & Gaining Customer Loyalty Basics of Retail, Understanding the Company’s customers & 38 strategy to win a loyal customer, the evolution of retail and the changing customer expectations over the years 3 Basics of Sign Language To train employees to understand the basic principles of sign 70 language to help them converse with the special employees at the stores of the Company. 4 Excellence in Store Operations Focused on the means of achieving great retail performance 6 by virtue of enhancing the store productivity and profitability by adopting proven best practices 5 Managerial Excellence Fundamentals of Coaching, Mentoring, Leadership, Motivating 50 team & art of giving constructive feedback to Managers to help get the best out of their teams Total No. of Employees Trained 239
Internal Control Systems Strong procurement strategy: Your Company uses multiple vendors for procurement and manufacturing of its products. A Your company has put in place internal control systems and a key success factor of our business is to ensure that we are able to structured internal audit process vested with the task of safeguarding source our products efficiently and at competitive rates to maintain the assets of the organisation and ensuring reliability and accuracy our gross margins and ensure timely execution. of the accounting and other operational data. Internal audit is conducted for all the processes to identify risks and verify whether Sensitivity to consumer spending habits: Consumer sentiment all systems and processes are commensurate with the business size in the economy and consequent spending is crucial to your and structure. These internal controls are verified by the Members Company’s business. Sentiment could be affected by the growth of the Audit Committee to keep a check on existing systems and of the economy, interest rates, inflation expectations and future take corrective action to further enhance control measures. growth expectations. These factors are beyond Company’s control. Risks and Concerns However, your company’s core market namely India is considered the brightest star in the global economy with GDP growth of over Intense Competitive Pressure: India’s branded apparel landscape 7.5 per cent in the coming years. is being highly infiltrated by various brands, both domestic and international, due to its high growth potential. In order to rise above Ability to anticipate and respond to changing trends: Sales this competition, your company’s strategic priorities lie in targeting levels and margins depend on Company’s ability to sense fashion the aspirational emerging city consumers with strong focus on changes and respond swiftly. If its clothing line were not in with value-for-money orientation. the consumer preferences, its sales will be lower and such stock would have to be heavily discounted leading to drop in profits. Brand continuity & licensing agreement: The company’s core Your company has developed a capable team of product planners, strength lies in its exclusive deal with the ‘Being Human Foundation’ designers and supply chain experts to respond speedily to changes. and the extension of its agreement with the same. The current licensing period extends until March 2020. There is always a risk of its discontinuance. However, We enjoy a strong relation with the foundation. Your company is already in process of renewing the licensing deal with the Foundation, which is expected to conclude in the current financial year itself. 48 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 49
CORPORATE GOVERNANCE REPORT
1. Company’s philosophy on code of Corporate headed by Mr. Pradip Dubhashi, Non-Executive Chairman Governance: and Independent Director. Mrs. Sangeeta Mandhana is The Company’s corporate governance is a reflection of the Managing Director and Mr. Priyavrat Mandhana is an the value system encompassing our culture, policies, and Executive Director. relationship with our stakeholders. Integrity and transparency are key to our corporate governance practices to gain and The Board also comprises of Mr. Ramnath Pradeep and Mr. retain the trust of our stakeholders at all times. Our corporate Kiran Vaidya, who are Independent Directors and Mr. Sachin governance philosophy encompasses regulatory and Jaju, Non-Executive Director. The Non-Executive Directors legal requirements, which aims at a high level of business are accomplished professionals in their respective fields of ethics, effective supervision and enhancement of value for expertise. all stakeholders. The Management strives to adhere to all the Corporate Governance practices which form part of a. Details relating to the composition of the Board of SEBI (Listing Obligations and Disclosure Requirements), Directors, number of Directorships, Memberships Regulations, 2015 (‘Listing Regulations’). The Company’s and Chairmanships of the Directors of the philosophy of Corporate Governance is not only compliant Company in other companies (as on 31st March, with the statutory requirements but also underlines our 2018) are as follows: commitment to operate in the best interest of the stakeholders. Number Number of Committee of other Memberships in other Directorship domestic Companies Name of the Category of Corporate Governance Structure: held Director Director The Company follows a dynamic governance structure with (including As As an appropriate flow of authority, which is aligned with the Private Chairman Member Companies) responsibility and obligations of each employee. Tenet of the Mr. Pradip Non - Executive 6 1 1 Corporate Governance structure is the three tier governance Dubhashi and Independent philosophy adopted by the Company, outlined below: Chairman Mr. Ramnath Non - Executive 6 1 4 (i) Tactical Supervision – The Board of Directors (Board) Pradeep and Independent comprising of the Executive and Non-Executive Directors, Mr. Kiran Vaidya Non - Executive 3 0 0 sites the overall strategy for the Company. The focus is and Independent on the fiduciary and trusteeship role exercised by the Mrs. Sangeeta Executive 0 0 0 Board to align and direct the actions of the organization Mandhana towards creating wealth and stakeholder value. Mr. Priyavrat Executive 2 0 0 Mandhana (ii) Executive Management – The Corporate Management Mr. Sachin Jaju Non - Executive 0 0 0 comprising of the Executive Directors, Chief Executive Note: Membership/Chairmanship relates to membership Officer and Chief Financial Officer & Chief Operating of Committees referred to in Regulation 26(1) of the Listing Officer of the Company, shares the responsibility of Regulations, viz. Audit Committee and Stakeholders Relationship driving the organization towards achieving the goals Committee of all public limited companies, whether listed or not anchored by the Board of Directors. and excludes private limited companies, foreign companies and companies licensed under Section 8 of the Companies Act, 2013. (iii) Operational Management – The Head of each Operations are responsible for managing the day to day b. Details relating to the Board Meetings held affairs of the Company. during the Financial Year 2017-18 along with the attendance of each of the Directors are as This three-tier Corporate Governance Structure not only follows: ensures greater management accountability and credibility but The Board met five times during the financial year under also facilitates increased business autonomy, performance, review on the following dates: discipline and development of business leaders. 1. 29th May, 2017 2. Board of Directors: 2. 12th September, 2017 There were six Directors on the Board of the Company as 3. 28th September, 2017 on 31st March, 2018. The Board of Directors comprises of 4. 14th December, 2017 th Executive Directors and Non-Executive Directors including 5. 14 February, 2018 Independent Directors and a Woman Director. The Board is 50 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 51
Attendance: of the Company is to monitor and effectively supervise the Number of Number of Whether financial reporting process of the Company with a view Sr. meetings Meetings attended the Name of the Director to ensure accurate, timely and proper disclosures and No. entitled to attended last AGM attend (20.09.2017) transparency and integrity of financial reporting. 1. Mr. Pradip Dubhashi 5 5 Yes 2. Mr. Ramnath Pradeep 5 5 Yes A. Brief description of the terms of reference of the Audit 3. Mr. Kiran Vaidya 5 5 Yes Committee inter alia includes: 4. Mr. Sachin Jaju 5 3 Yes I. The role of the Audit Committee includes the following: 5. Ms. Sangeeta Mandhana 5 4 No 6. Mr. Priyavrat Mandhana 5 5 Yes 1) oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure c. Disclosure of Relationships between Directors inter-se: that the financial statement is correct, sufficient and 1. Mrs. Sangeeta Mandhana Cousin Sister in Law of Mr. Priyavrat credible; Mandhana and Mr. Sachin Jaju 2. Mr. Priyavrat Mandhana Cousin Brother in Law of Mrs. Sangeeta Mandhana & Cousin Brother of Mr. 2) recommendation for appointment, remuneration and Sachin Jaju terms of appointment of auditors of the Company; 3. Mr. Sachin Jaju Cousin Brother of Mr. Priyavrat Mandhana and Cousin Brother in Law of 3) approval of payment to statutory auditors for any other Mrs. Sangeeta Mandhana services rendered by the statutory auditors; Except the above, none of the other Directors is related with each 4) reviewing, with the management, the annual financial other. statements and auditor’s report thereon before submission to the board for approval, with particular d. Number of Shares and Convertible Instruments reference to: held by Non- Executive Directors: Mr. Sachin Jaju, Non-executive Director, holds 35,333 equity (a) matters required to be included in the director’s shares of ` 10/- each of the Company as on 31st March, responsibility statement to be included in the 2018. No other Non- Executive Director holds any equity board’s report in terms of clause (c) of sub-section shares of the Company. (3) of Section 134 of the Companies Act, 2013; e. The Company had imparted familiarization programme for (b) changes, if any, in accounting policies and practices the Independent Directors of the Company for them to get and reasons for the same; acquainted with the nature of business of the company. The details of which are provided on the website of the Company (c) major accounting entries involving estimates based at www.mandhanaretail.com under the tab ‘Familiarization on the exercise of judgment by management; Programme for Independent Directors’. The web link for the same is as follows: http://mandhanaretail.com/admin/ (d) significant adjustments made in the financial Documents/DOC58eb27a500b19.pdf statements arising out of audit findings; 3. Audit Committee: (e) compliance with listing and other legal requirements The Board of Directors has constituted Audit Committee relating to financial statements; in conformity with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing (f) disclosure of any related party transactions; Regulations. The terms of reference and scope of activities of the Audit Committee are in conformity with the Companies (g) modified opinion(s) in the draft audit report; Act, 2013 and the Listing Regulations. 5) reviewing, with the management, the quarterly financial The Audit Committee comprises of the following Directors as statements before submission to the board for approval; on 31st March, 2018:
1. Mr. Kiran Vaidya Chairman (Non-Executive 6) reviewing, with the management, the statement of uses/ Independent Director) application of funds raised through an issue (public 2. Mr. Pradip Dubhashi Member (Non-Executive issue, rights issue, preferential issue, etc.), the statement Independent Director) of funds utilized for purposes other than those stated in 3. Mr. Ramnath Pradeep Member (Non-Executive the offer document / prospectus/ notice and the report Independent Director) submitted by the monitoring agency monitoring the 4. Mr. Priyavrat Mandhana Member (Executive Director) utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the board to The Company Secretary of the Company acts as the Secretary take up steps in this matter; of the Audit Committee. 7) reviewing and monitoring the auditor’s independence The Audit Committee is responsible for overseeing the and performance, and effectiveness of audit process; processes related to financial reporting and information dissemination. The primary objective of the Audit Committee 50 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 51
8) approval or any subsequent modification of transactions 4) internal audit reports relating to internal control of the Company with related parties; weaknesses;
9) scrutiny of inter-corporate loans and investments; 5) the appointment, removal and terms of remuneration of the chief internal auditor are subject to review by the 10) valuation of undertakings or assets of the listed entity, audit committee; and wherever it is necessary; 6) statement of deviations: 11) evaluation of internal financial controls and risk management systems; (a) quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to 12) reviewing, with the management, performance of stock exchange(s) in terms of Regulation 32(1). statutory and internal auditors, adequacy of the internal control systems; (b) annual statement of funds utilized for purposes other than those stated in the offer document/ 13) reviewing the adequacy of internal audit function, if any, prospectus/notice in terms of Regulation 32(7). including the structure of the internal audit department, staffing and seniority of the official heading the B. Meetings and Attendance: department, reporting structure coverage and frequency Five Audit Committee Meetings were held during the year of internal audit; under review. The dates on which the meetings held are as follows: 14) discussion with internal auditors of any significant findings 1. 29th May, 2017 and follow up there on; 2. 12th September, 2017 3. 28th September, 2017 15) reviewing the findings of any internal investigations by 4. 14th December, 2017 the internal auditors into matters where there is suspected 5. 14th February, 2018 fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; Category Number Number Sr. of of Name of the Member Meetings Meetings 16) discussion with statutory auditors before the audit No. entitled attended commences, about the nature and scope of audit as well to attend 1. Mr. Kiran Vaidya Non – Executive 5 5 as post-audit discussion to ascertain any area of concern; (Chairman) Independent 2. Mr. Pradip Dubhashi Non – Executive 5 5 17) to look into the reasons for substantial defaults in Independent the payment to the depositors, debenture holders, 3. Mr. Ramnath Pradeep Non – Executive 5 5 shareholders (in case of non-payment of declared Independent dividends) and creditors; 4. Mr. Priyavrat Mandhana Executive 5 5
18) to review the functioning of the whistle blower mechanism; 4. Nomination & Remuneration Committee: The Board of Directors has constituted the Nomination and 19) approval of appointment of chief financial officer after Remuneration Committee of the Board of Directors of the assessing the qualifications, experience and background, Company in conformity with the provisions of Section 178 of etc. of the candidate; the Companies Act, 2013 and Regulation 19 of the Listing Regulations. The terms of reference and scope of activities of 20) carrying out any other function as is mentioned in the the Nomination and Remuneration Committee is in conformity terms of reference of the audit committee; and with the Companies Act, 2013 and the Listing Regulations. 21) to ensure prior approval to all related party transaction The Nomination and Remuneration Committee comprises of pursuant to applicable section of the Companies Act, the following Directors as on 31st March, 2018: 2013 and the Listing Regulations. i. Mr. Ramnath Pradeep Chairman (Non-Executive Independent Director) II. The audit committee mandatorily reviews the following ii. Mr. Pradip Dubhashi Member information: (Non-Executive Independent Director) 1) management discussion and analysis of financial iii. Mr. Kiran Vaidya Member condition and results of operations; (Non-Executive Independent Director) The Company Secretary of the Company acts as the Secretary 2) statement of significant related party transactions of the Nomination and Remuneration Committee. (as defined by the audit committee), submitted by management;
3) management letters / letters of internal control weaknesses issued by the statutory auditors; 52 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 53
A. Brief description of the terms of reference of the Nomination C. Disclosures with respect to remuneration in addition and Remuneration Committee inter alia includes: to disclosures required under the Companies Act, 1) formulation of the criteria for determining qualifications, 2013: positive attributes and independence of a director and Details of sitting fees paid to the Non-executive Directors for the recommend to the board of directors a policy relating financial year 2017-18: to, the remuneration of the directors, key managerial personnel and other employees; Sr. Sitting fees paid Name of the Non-Executive Director No. (`) 2) formulation of criteria for evaluation of performance of 1. Mr. Pradip Dubhashi ` 5,50,000/- independent directors and the board of directors and Key 2. Mr. Ramnath Pradeep ` 5,75,000/- Managerial Personnel of the Company; 3. Mr. Kiran Vaidya ` 5,25,000/- 4. Mr. Sachin Jaju ` 1,50,000/- 3) devising a policy on diversity of board of directors; Details of the remuneration paid to the Managing Director and the Executive Director of the Company for the financial year 2017-18: 4) identifying persons who are qualified to become directors and who may be appointed in senior management in Sr. Remuneration Perquisites Total accordance with the criteria laid down, and recommend Name of the Director paid/payable (`) to the board of directors their appointment and removal. No. (`) (`) 1. Mrs. Sangeeta 82,93,418 4,14,720 87,08,138 5) whether to extend, terminate or continue the term of Mandhana# appointment of the independent director, Key Managerial 2. Mr. Priyavrat 82,93,418 4,14,720 87,09,218 Personnel of the Company, on the basis of the report of Mandhana# performance evaluation of independent directors. #During the financial year 2017-18, Mrs. Sangeeta Mandhana and Mr. Priyavrat Mandhana was paid remuneration at ` 8,34,560/- per B. Meetings and Attendance: month (inclusive of company’s contribution to provident fund). In During the year under review, one Meeting of the Committee view of limits provided under the provisions of Section 197 of the was held on 14th December, 2017. Companies Act, 2013, the excess remuneration of ` 13,06,582/- each was refunded by Mrs. Sangeeta Mandhana and Mr. Priyavrat Number Number of Mandhana. Sr. of Name of the Member Category Meetings Meetings No. entitled attended Notes: to attend 1. Mr. Ramnath Pradeep Non – Executive 1 1 (Chairman) Independent a. Salaries and Perquisites include Salary, allowances, company’s contribution to provident fund and monetary value 2. Mr. Pradip Dubhashi Non – Executive 1 1 Independent of perquisites, if any. The terms of appointment of Executive Directors as approved by shareholders, are contained in their 3. Mr. Kiran Vaidya Non – Executive, 1 1 Independent respective Agreements entered into with the Company. The tenure of office of the Executive Directors is three years from their respective dates of appointments. The notice period for C. Performance evaluation criteria for Independent Directors: termination of appointment is determinable as per company’s The relevant information on performance evaluation for policy. While there is no specific provision for payment of Independent Directors is covered under sub-heading performance linked incentives and severance fees for any of ‘Independent Directors’ in this report. the Executive Directors, the Board is empowered to consider the same at its discretion, taking into account attendant facts 5. Remuneration of Directors: and circumstances. A. P ecuniary relationship or transactions of the non- executive directors vis-à-vis the Company: b. The Company has not provided any Stock Options to its Except for the sitting fees paid to the Non-Executive Directors Directors or employees. for attending the Board and Committee Meetings, there were no other pecuniary relationships or transactions of Non- 6. Stakeholders Relationship Committee: Executive Directors vis- à-vis the Company. The Board of Directors has constituted the Stakeholders Relationship Committee of the Board of Directors of the B. Criteria of making payments to non-executive Company in conformity with the provisions of Section 178 of directors: the Companies Act, 2013 and Regulation 20 of the Listing The Non-Executive and Independent Directors are paid Regulations. ` 50,000/- per meeting for attending the Meetings of the Board and Audit Committee and ` 25,000/- per meeting for A. Brie f description of the terms of reference of the attending the Meetings of the Nomination and Remuneration Stakeholders Relationship Committee inter alia Committee, Stakeholders Relationship Committee and includes: Corporate Social Responsibility Committee, which is within the i) Considering and resolving the grievances of the security limits prescribed under the provisions of the Act. holders of the Company including complaints related to transfer of shares, non-receipt of annual report and non- receipt of declared dividends; 52 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 53
ii) Issue of duplicate/ split/ consolidated share certificates; At this meeting the Independent Directors reviewed the following: iii) Allotment and listing of shares; 1. Performance of the Chairman; iv) Reference to statutory and regulatory authorities regarding investor grievances; and 2. Performance of the Independent and Non-Independent Directors; v) Ensure proper and timely attendance and Redressal of investor queries and grievances. 3. Performance of the Board as a whole and its Non- Administrative Committees. The Stakeholders Relationship Committee comprises of the following Directors as on 31st March, 2018: The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company i. Mr. Sachin Jaju Chairman Management and the Board. (Non-Executive Director) ii. Mr. Priyavrat Mandhana Member (Executive Director) The Chairman of the meeting of the Independent Directors takes iii. Mr. Ramnath Pradeep Member appropriate steps to present Independent Directors’ views to the (Non-Executive Independent Director) Board of Directors of the Company. The Company Secretary, acts as secretary to the Stakeholders Evaluation of performance of all Directors is undertaken annually. Relationship Committee and is designated as the Compliance The Company has implemented a system of evaluating performance Officer of the Company. of the Board of Directors and of its Committees and individual Directors on the basis of a structured questionnaire which comprises B. Meetings and Attendance: evaluation criteria taking into consideration various performance During the year under review, one Meeting of the Committee related aspects. was held on 14th February, 2018. The Board of Directors has expressed its satisfaction with the Number Number of evaluation process. Sr. of Name of the Director Category Meetings Meetings No. entitled attended to attend 8. General body Meetings: 1. Mr. Sachin Jaju (Chairman) 1 0 A. P articulars of the last 3 Annual General Meetings Non-Executive (AGM): 2. Mr. Priyavrat Mandhana Executive 1 1 Details of Special 3. Mr. Ramnath Pradeep Non-Executive 1 1 Particulars Date and Time Venue Independent Resolutions passed 6th AGM 20th Plot No. C-2, NIL C. Shareholders’ Complaints during the Year: (FY 2016-17) September, M.I.D.C., Tarapur 2017 at 12 Industrial Area, Number of complaints received during the period 4 noon Boisar, Dist. Palghar Number of complaints resolved during the period 4 - 401506 Number of complaints remaining unresolved at the end of Nil 5th AGM 7th September, Plot No. E-132, i. Adoption of new set of the year (FY 2015-16) 2016 at 11.00 M.I.D.C., Tarapur Articles of Association a.m. Industrial Area, containing regulations Boisar, Dist. Palghar in accordance with the The SCORES website of SEBI for redressing grievances of the - 401506 Companies Act, 2013 investors is being visited at regular intervals by the Company and ii. Alteration of there are no pending complaints registered with SCORES as on Memorandum 31st March, 2018. of Association in accordance with the Companies Act, 2013 There are no pending cases of share transfer as on 31st March, iii. Change in the name 2018. of the Company iv. Increase in the borrowing powers of As per Regulation 46(2)(j) of Listing Regulations, the e-mail ID of the Company the grievance redressal and other relevant details of the Company v. To make investments, is [email protected]. provide loans, Guarantees and securities beyond the As per Regulation 46(2)(k) of the Listing Regulations, the contact prescribed limits information of designated official of the Company viz. Mr. Virendra 4th AGM 30th September, Plot No. E-132, NIL Varma, Company Secretary of the Company is cs@mandhanaretail. (FY 2014-15) 2015 at M.I.D.C., Tarapur 11.00 a.m. Industrial Area, com; Tel. No. 022-43539191. Boisar, Dist. Palghar - 401506 7. Independent Directors: Meeting of Independent Directors: B. Special Resolutions passed through Postal Ballot The Company’s Independent Directors met on 23rd March, during the year under review: 2018 without the presence of Executive Directors or members No Special Resolution was passed by the Company through of the Management. All the Independent Directors attended Postal Ballot during the year under review. the Meeting. 54 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 55
However, during the year under review, the Company about the Company like the details of its business, financial conducted Postal Ballot for appointment of Mr. Manish information, shareholding pattern, codes and policies etc. Mandhana as the Chief Executive Officer of the Company The disclosures made by the Company to the Stock Exchanges (Ordinary Resolution). where the securities of the Company are listed are also hosted on the website of the Company. C. Person who conducted the postal ballot exercise: Mr. Nitin R. Joshi, Practicing Company Secretary was E. P resentations made to institutional investors or to appointed as the Scrutinizer to conduct the aforesaid Postal the analysts: Ballot process (including e-voting) in a fair and transparent The presentations made by the Company to institutional manner. investors/ analysts are available on the website of the Company i.e. www.mandhanaretail.com D. Whether any special resolution is proposed to be conducted through postal ballot: 10. General Shareholder information: Till the date of this report, the Company does not intend or The Company was incorporated on 12th February, 2011, as propose to pass any Special Resolution through Postal ballot. Mandhana Retail Ventures Limited. The name of the Company was changed from ‘Mandhana Retail Ventures Limited’ to ‘The E. Procedure for Postal Ballot: Mandhana Retail Ventures Limited’ w.e.f. 26th September, Pursuant to Section 110 of the Companies Act, 2013 and 2016, pursuant to the change of name certificate received all other applicable provisions, if any, of the Companies from Registrar of Companies, Mumbai. Act, 2013 read with the Companies (Management and Administration) Rules, 2014 (including any statutory Corporate Identification Number (CIN) of the Company is modification, amendments or re-enactment thereof for the L52390MH2011PLC213349. time being in force), Listing Regulations and other applicable laws and regulations, the Company had provided to its The Equity shares of the Company were listed on BSE Limited members the facility to cast their votes by way of postal ballot and National Stock Exchange of India Limited (NSE) on process (including e-voting) on the resolution as stated above. 14th December, 2016. The Company appointed Central Depository Services Limited (CDSL) for facilitating e-voting. A. Annual General Meeting - Date and Time : 25th August, 2018 at 12.00 Noon The resolution was passed with requisite majority. Postal - Venue : Plot No. C-2, M.I.D.C., Tarapur Ballot Notice, Postal Ballot Form and results of the Postal Industrial Area, Boisar, District Ballot Voting are available on the Company’s website: Palghar – 401 506 www.mandhanaretail.com. B. Financial Year : 1st April, 2017 to 31st March, 2018 C. Dividend payment date : N.A. 9. Means of Communications: D. The name and address : BSE Limited A. Quarterly Results: of Stock Exchange(s) at Phiroze Jeejeebhoy Towers, Dalal which the Company’s Street, Mumbai- 400001 The financial results are regularly submitted to the Stock equity shares are listed Exchanges where the securities of the Company are National Stock Exchange of India and a confirmation about Limited listed pursuant to the Listing Regulations requirements payment of annual listing Exchange Plaza, C-1, Block G, and are published in the newspapers. The financial fee to each of the stock Bandra Kurla Complex, Bandra (E) results are also displayed on the Company’s website i.e. exchanges www.mandhanaretail.com Mumbai – 400 051 The Company has paid the listing B. Newspapers wherein results normally published: fees to the Stock Exchanges within The results of the Company are normally published in the prescribed time frame. Financial Express (in English) and Mahasagar & Tarun Bharat (E) Security Code / Symbol : (in Marathi). ISIN : INE759V01019 Security Code for BSE : 540210 C. Website where the results are displayed: Symbol for NSE : TMRVL www.mandhanaretail.com
D. Whether the website also displays official news releases: The Company has maintained a functional website i.e. www.mandhanaretail.com containing basic information 54 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 55
F. The Market Price data during year is given below: BSE NSE Month High Low Traded High Low Traded (in `) (in `) Volume (in `) (in `) Volume April, 2017 235.00 194.50 363557 236.00 194.10 1400069 May, 2017 203.70 144.65 373006 204.35 145.25 1909994 June, 2017 189.00 150.00 341102 189.20 149.00 1635799 July, 2017 178.00 135.00 127114 175.00 153.00 808214 August, 2017 166.05 123.50 150727 167.00 142.10 738654 September, 2017 165.60 138.00 354306 166.30 138.00 2233543 October, 2017 174.75 132.20 142216 155.00 137.60 728006 November, 2017 149.55 129.00 168026 152.00 114.80 849544 December, 2017 167.00 135.00 608769 166.65 133.35 2112602 January, 2018 188.40 146.00 521300 188.30 148.35 2816922 February, 2018 153.50 128.00 131930 153.00 127.00 557262 March, 2018 144.80 103.65 498933 137.95 104.45 1189509
G. Performance in comparison to broad-based indices such as BSE/NSE Sensex (Average closing): BSE (Average closing price) NSE (Average closing price) Month Share Price Sensex Share Price Nifty April, 2017 208.29 29695.83 208.30 9214.57 May, 2017 186.66 30420.07 186.70 9436.99 June, 2017 166.60 31144.68 166.46 9606.95 July, 2017 160.71 31879.61 160.51 9850.12 August, 2017 151.98 31772.23 152.49 9901.18 September, 2017 151.52 31887.12 151.59 9977.92 October, 2017 145.82 32397.64 145.59 10138.68 November, 2017 139.18 33395.14 139.11 10324.75 December, 2017 145.63 33424.40 145.81 10322.26 January, 2018 166.12 34989.42 166.21 10771.15 February, 2018 139.88 34287.04 139.91 10533.11 March, 2018 118.75 33323.32 118.71 10232.62
36000.00 225.00 35000.00 200.00 34000.00 175.00 33000.00 150.00 32000.00 125.00 31000.00 100.00 30000.00 75.00 29000.00 50.00 28000.00 25.00 27000.00 0.00 Jul-17 Apr-17 Jun-17 Jan-17 Jan-18 Feb-18 Sep-17 Oct-17 Aug-17 Dec-17 Mar-18 Nov-17 May-17
Sensex Share Price 56 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 57
11000.00 225.00 200.00 10500.00 175.00 10000.00 150.00 125.00 9500.00 100.00 9000.00 75.00 50.00 8500.00 25.00 8000.00 0.00 Jul-17 Apr-17 Jun-17 Jan-17 Jan-18 Feb-18 Sep-17 Oct-17 Aug-17 Dec-17 Mar-18 Nov-17 May-17
Sensex Share Price
H. In case the securities are suspended from trading, reason thereof: Not applicable, since the securities of the Company have not been suspended from trading.
I. Registrar to an issue and share transfer agents: Link Intime India Private Limited, C-101, 247 Park, L.B.S. Marg, Vikhroli (West), Mumbai - 400083.
J. Share Transfer System: Link Intime India Private Limited is the Registrar and Share Transfer Agents of the Company. Transfer of physical shares are approved by the Board of Directors or the Stakeholders Relationship Committee which meets at opportune time and if the documents are complete and in order in all respects, the same are registered and returned to the transferees within the stipulated time.
K. i. Distribution of Shareholding as on 31st March, 2018: No. of % of Shareholders No. of Shares % of total issued Shares range Shareholders capital 1 – 500 7,857 83.43 9,46,710 4.29 501 – 1000 693 7.36 5,63,473 2.55 1001- 2000 351 3.73 5,37,066 2.43 2001 – 3000 134 1.42 3,44,571 1.56 3001 – 4000 71 0.75 2,53,945 1.15 4001 – 5000 53 0.56 2,50,481 1.13 5001 – 10000 98 1.04 7,43,225 3.37 10001 & Above 161 1.71 1,84,43,138 83.52 Total 9,418 100.00 2,20,82,609 100.00 56 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 57
ii. Shareholding pattern as on 31st March, 2018: Sr. No. of Total no. of Total Shareholding as Category of Shareholder Shareholders Shares a percentage of total No. no. of Shares (A) Shareholding of Promoter and Promoter Group(A) 17 83,36,543 37.75 (B) Public Shareholding (1) Institutions (a) Mutual Funds 0 0 0 (b) Venture Capital Funds 0 0 0 (c) Alternate Investment Funds 0 0 0 (d) Foreign Venture Capital Investors 0 0 0 (e) Foreign Portfolio Investor 2 6,58,374 2.98 (f) Financial Institutions/ Banks 4 4,61,225 2.09 (g) Insurance Companies 0 0 0 (h) Provident Funds / Pension Funds 0 0 0 Sub Total (B) (1) 6 11,19,599 5.07 (2) Central Government/ State Government(s)/ President of India 0 0 0 Sub Total (B) (2) 0 0 0 (3) Non-Institutions (a) Individuals i. Individual shareholders holding nominal share capital upto ` 2 Lakhs 8389 34,29,952 15.53 ii. Individual shareholders holding nominal share capital in excess of ` 2 Lakhs 43 51,93,052 23.52 (b) NBFC’s registered with RBI 0 0 0 (c) Employee Trusts 0 0 0 (d) Overseas depositories (holding DRs) 0 0 0 (e) Any other i. Hindu Undivided Family 332 4,62,228 2.09 ii. NRI (Non-repatriate) 41 64,806 0.29 iii. Directors or Director’s Relatives 1 35,333 0.16 iv. NRI (Repatriate) 120 3,01,037 1.36 v. Clearing Members 90 2,02,680 0.92 vi. Bodies Corporate 173 29,37,379 13.30 Sub Total (B) (3) 9,189 1,26,26,467 57.18 Total Public Shareholding (B) = (B)(1) + (B)(2)+(B)(3) 9,195 1,37,46,066 62.25 Total (A) + (B) 9,212 2,20,82,609 100.00 (C) Non Promoter - Non Public (1) Shares Underlying DRs 0 0 0 (2) Shares Held By Employee Trust 0 0 0 Grand Total (A)+(B)+(C) 9,212 2,20,82,609 100.00
The shareholding spread across various demat accounts are consolidated on the basis of Permanent Account Number pursuant to SEBI circular No. SEBI/HO/CFD/CMD/ CIR/P/2017/128 dated 19th December, 2017.
L. Dematerialization of shares: N. Commodity price risk or foreign exchange risk The Company has signed agreements with National Securities and hedging activities: Depository Limited (NSDL) and Central Depository Services NIL (India) Limited (CDSL) and Link Intime India Private Limited to offer depository services to its shareholders and has paid O. Plant Locations: respective charges for the benefit of the Members. The Company is not in the business of manufacturing of goods and does not have a manufacturing plant. Your Company confirms that the entire Promoters’ holding is in dematerialized form and the same is in line with the directives P. Address for Correspondence: issued by the Securities and Exchange Board of India. The Mandhana Retail Ventures Limited, 006-008, Peninsula Centre, Dr. S. S. Rao Road, Parel, The shares of your Company are regularly traded at the BSE Mumbai – 400 012 Limited and the National Stock Exchange of India Limited and Tel: 022 - 4353 9191 hence have good liquidity. Fax: 022 - 4353 9358 Email: [email protected] Out of the total 2,20,82,609 equity shares of the Company, 2,20,80,396 equity shares representing 99.99% are in 11. Other Disclosures: dematerialized form as on 31st March, 2018. A. Disclosures on materially significant related party transactions that may have potential conflict with M. Outstanding global depository receipts or the interests of listed entity at large: american depository receipts or warrants or any NIL convertible instruments, conversion date and likely impact on equity: NIL 58 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 59
B. Details of non-compliance by the listed entity, 12. Discretionary requirements as specified penalties, strictures imposed on the listed entity in Part E of Schedule II of the Listing by stock exchange(s) or the board or any statutory Regulations: authority, on any matter related to capital A. The Board: markets, during the last three years: The Company has a Non-Executive Chairman. No separate NIL office is provided to the Chairman. The Non-Executive Chairman is provided secretarial and other assistance C. Details of establishment of vigil mechanism, whenever needed to enable him to discharge his responsibilities whistle blower policy, and affirmation that no effectively. personnel has been denied access to the Audit Committee: B. Shareholder Rights: The Company has established a Vigil Mechanism, which The Company’s financial results are furnished to the Stock includes a Whistle Blower Policy, for its Directors and Exchanges and are also published in the newspapers and on Employees, to provide a framework to facilitate responsible the website of the Company and therefore results were not and secure reporting of concerns of unethical behaviour, separately sent to the Members. The financial results of the actual or suspected fraud or violation of the Company’s Company are displayed on the website of the Company i.e. Code of Conduct & Ethics. The details of establishment of www.mandhanaretail.com. Vigil Mechanism / Whistle Blower Policy are posted on the website of the Company and the weblink to the same is C. Modified opinion(s) in audit report: http://www.mandhanaretail.com/investorRelation.ph. The financial statements of the Company do not contain any No Director / employee has been denied access to the Audit modified opinion. Committee. D. Separate posts of chairperson and chief executive D. Details of compliance with mandatory officer requirements and adoption of the non-mandatory Mr. Pradip Dubhashi, Non- Executive Independent Director, is requirements: the Chairman of the Board and Mr. Manish Mandhana is the The Company constantly ensures compliance with all the Chief Executive Officer of the Company. mandatory requirements of the Listing Regulations. The status of compliances with the non-mandatory requirements E. Reporting of internal auditor specified in Part E of Schedule II have been included in this The Internal Auditor reports to the Audit Committee. Report. 13. The disclosures of the compliance with corporate E. W eblink where policy for determining material governance requirements specified in regulation subsidiaries is disclosed: 17 to 27 and clauses (b) to (i) of sub-regulation Not applicable as Company does not have a Subsidiary (2) of regulation 46: Company. The Company has complied with the corporate governance requirements specified in Regulations 17 to 27 and clauses F. W eblink where policy on dealing with related (b) to (i) of sub - regulation (2) of Regulation 46. party transactions is disclosed: http://www.mandhanaretail.com/admin/Documents/ For and on behalf of the Board of Directors DOC58eb27c15fb83.pdf The Mandhana Retail Ventures Limited (formerly known as Mandhana Retail Ventures Limited) G. Disclosure of commodity price risks and commodity hedging activities: Sangeeta Mandhana Priyavrat Mandhana Not applicable. Managing Director Executive Director DIN: 06934972 DIN: 02446722
Place: Mumbai Date: 28th May, 2018 58 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 59
Disclosure in Compliance with Part F of Schedule V of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 for the year 2017-18
1. Aggregate no. of shareholders and the outstanding shares lying in the Unclaimed Suspense Shareholders – 6 Account at the beginning of the year Outstanding Equity Shares – 241 2. No. of shareholders who approached the issuer for transfer of shares from the Suspense 2 Account during the year 3. No. of shareholders to whom shares were transferred from Suspense account during the year 2 4. Aggregate no. of shareholders and the outstanding shares lying in the Suspense Account at the Shareholders – 4 end of the year Outstanding Equity Shares – 139 The voting rights on the aforesaid shares lying in the Suspense Account shall remain frozen till the rightful owners of such shares claims the shares.
For and on behalf of the Board of Directors The Mandhana Retail Ventures Limited (formerly known as Mandhana Retail Ventures Limited)
Sangeeta Mandhana Priyavrat Mandhana Managing Director Executive Director DIN: 06934972 DIN: 02446722
Place: Mumbai Date: 28th May, 2018
Declaration by the CEO under Schedule V (D) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 regarding adherence to the Code of Conduct:
To the best of my knowledge and belief, this is to affirm and declare, on behalf of the Board of Directors of the Company and senior management personnel, that:
a. The Board of Directors has laid down a Code of Conduct, Ethics and Business Principles for all Board Members and Senior Management of the Company [‘the Code of Conduct’];
b. The Code of Conduct has been posted on the website of the Company;
c. All the Board Members and Senior Management Personnel have affirmed their compliance and adherence with the provisions of the Code of Conduct for the financial year ended 31st March 2018.
For and on behalf of the Board of Directors and Senior Management Personnel
Manish B. Mandhana Chief Executive Officer
Place: Mumbai Date: 28th May, 2018 60 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 61
Compliance Certificate pursuant to Regulation 17(8) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015:
To, The Board of Directors, The Mandhana Retail Ventures Limited
We, undersigned in our capacity as the Chief Executive Officer and Chief Financial Officer of The Mandhana Retail Ventures Limited (“the Company”), to the best of our knowledge and belief, certify that: a) We have reviewed the financial statements and the cash flow statement for the year ended 31st March, 2018 and based on our knowledge and belief:
i. these statements do not contain any materially untrue statements or omit any material fact or contain statements that might be misleading;
ii. these statements together present a true and fair view of the Company’s affair and are in compliance with the existing Accounting Standards, applicable Laws and Regulations. b) We further state that to the best of our knowledge and belief, there are no transactions entered into by the Company during the year which are fraudulent, illegal or violative of Company’s Code of Conduct. c) We are responsible for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of the Internal Control Systems of the Company pertaining to financial reporting and we have not come across any reportable deficiencies in the design or operation of such internal controls. d) We have indicated to the Auditors and Audit Committee:
i. significant changes, if any, in the internal control over financial reporting during the year;
ii. significant changes, if any, in the accounting policies made during the year and that the same have been disclosed in the notes to the financial statements; and
iii. instances of significant fraud of which we have become aware and involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting.
For The Mandhana Retail Ventures Limited (formerly known as Mandhana Retail Ventures Limited)
Manish Mandhana Hemant Gupta Chief Executive Officer Chief Financial Officer & Chief Operating Officer
Place: Mumbai Date: 28th May, 2018 60 THE MANDHANA RETAIL VENTURES LIMITED STATUTORY REPORTS | ANNUAL REPORT 2017-18 61
Independent Auditor’s Certificate on Compliance with the Corporate Governance requirements under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
To the Members of 7. We have complied with the relevant applicable requirements The Mandhana Retail Ventures Limited of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical 1. This certificate is issued in accordance with the terms of our Financial Information, and Other Assurance and Related engagement letter dated 9 October 2017. Services Engagements.
2. This report contains details of compliance of conditions of Opinion corporate governance by The Mandhana Retail Ventures 8. In our opinion, and to the best of our information and Limited (‘the Company’) for the year ended 31 March according to explanations given to us, we certify that the 2018 as stipulated in regulations 17-27, clause (b) to (i) of Company has complied with the conditions of Corporate regulation 46 (2) and paragraphs C, D and E of Schedule Governance as stipulated in the above-mentioned Listing V of the Securities and Exchange Board of India (Listing Regulations. Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’) pursuant to the Listing Agreement of the 9. We state that such compliance is neither an assurance as Company with Stock exchanges. to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the Management ’s Responsibility for compliance with affairs of the Company. the conditions of Listing Regulations 3. The compliance with the terms and conditions contained in the Restriction on use corporate governance is the responsibility of the Management 10. The certificate is addressed and provided to the members of of the Company including the preparation and maintenance the Company solely for the purpose to enable the Company of all relevant supporting records and documents. to comply with the requirement of the Listing Regulations, and it should not be used by any other person or for any other Auditor’s Responsibility purpose. Accordingly, we do not accept or assume any liability 4. Our examination was limited to procedures and or any duty of care for any other purpose or to any other implementation thereof adopted by the Company for ensuring person to whom this certificate is shown or into whose hands the compliance of the conditions of Corporate Governance. it may come without our prior consent in writing. It is neither an audit nor an expression of opinion on the financial statements of the Company. For B S R & Co. LLP 5. Pursuant to the requirements of the Listing Regulations, it is Chartered Accountants our responsibility to provide a reasonable assurance whether Firm’s Registration No: the Company has complied with the conditions of Corporate 101248W/W-100022 Governance as stipulated in Listing Regulations for the year ended 31 March 2018.
6. We conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Rishabh Kumar Purposes issued by the Institute of Chartered Accountants of Mumbai Partner India (ICAI). The Guidance Note requires that we comply with 28 May 2018 Membership No: 402877 the ethical requirements of the Code of Ethics issued by ICAI. 62 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 63
Independent Auditor’s Report
To the Members of We conducted our audit of the Ind AS financial statements in The Mandhana Retail Ventures Limited accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that we comply with Report on the Audit of the Ind AS Financial ethical requirements and plan and perform the audit to obtain Statements reasonable assurance about whether the Ind AS financial statements are free from material misstatement. We have audited the accompanying Ind AS financial statements of The Mandhana Retail Ventures Limited (“the Company”), which An audit involves performing procedures to obtain audit evidence comprise the Balance sheet as at 31 March 2018, the Statement of about the amounts and the disclosures in the Ind AS financial profit and loss, the Statement of changes in equity and the Statement statements. The procedures selected depend on the auditors’ of cash flows for the year then ended, and a summary of the judgment, including the assessment of the risks of material significant accounting policies and other explanatory information misstatement of the Ind AS financial statements, whether due to fraud (hereinafter referred to as “Ind AS financial statements”). or error. In making those risk assessments, the auditor considers Management’s Responsibility for the Financial internal financial controls relevant to the Company’s preparation of Statements (prepared as per Ind AS) the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. The Company’s Board of Directors is responsible for the matters An audit also includes evaluating the appropriateness of the stated in Section 134 (5) of the Companies Act, 2013 (“the Act”) accounting policies used and the reasonableness of the accounting with respect to the preparation of these financial statements that estimates made by the Company’s Directors, as well as evaluating give a true and fair view of state of affairs, profit/loss and other the overall presentation of the Ind AS financial statements. comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally We are also responsible to conclude on the appropriateness of accepted in India, including the Indian Accounting Standards (Ind management’s use of the going concern basis of accounting AS) prescribed under section 133 of the Act. and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast This responsibility also includes maintenance of adequate significant doubt on the entity’s ability to continue as going accounting records for safeguarding the assets of the Company concern. If we conclude that a material uncertainty exists, we are and for preventing and detecting frauds and other irregularities; required to draw attention in the auditor’s report to the related selection and application of appropriate accounting policies; disclosures in the Ind AS financial statements or, if such disclosures making judgments and estimates that are reasonable and prudent; are inadequate, to modify the opinion. Our conclusions are based and design, implementation and maintenance of adequate internal on the audit evidence obtained up to the date of auditor’s report. financial controls that were operating effectively for ensuring the However, future events or conditions may cause an entity to cease accuracy and completeness of the accounting records, relevant to to continue as a going concern. the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, We believe that the audit evidence we have obtained is sufficient whether due to fraud or error. and appropriate to provide a basis for our audit opinion on the Ind AS financial statements. In preparing the Ind AS financial statements, management is responsible for assessing the Company’s ability to continue as a Opinion going concern, disclosing, as applicable, matters related to going In our opinion and to the best of our information and according to concern and using the going concern basis of accounting unless the explanations given to us these Ind AS financial statements give management either intends to liquidate the Company or to cease the information required by the Act in the manner so required and operations, or has no realistic alternative but to do so. give a true and fair view in conformity with the accounting principles Auditor’s Responsibility generally accepted in India of its profit and other comprehensive income, changes in equity and its cash flows for the year ended 31 Our responsibility is to express an opinion on these Ind AS financial March 2018. statements based on our audit. Report on Other Legal and Regulatory We have taken into account the provisions of the Act, the Requirements accounting and auditing standards and matters which are required As required by the Companies (Auditor’s Report) Order, 2016 (‘the to be included in the audit report under the provisions of the Act Order’), issued by the Central Government of India in terms of and the Rules made thereunder. Section 143 (11) of the Act, we give in “Annexure A”, a statement on the matters specified in the paragraphs 3 and 4 of the Order. 62 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 63
As required by Section 143 (3) of the Act, we report that: (g) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit (a) we have sought and obtained all the information and and Auditors) Rules, 2014, in our opinion and to the best of explanations, which to the best of our knowledge and belief, our information and according to the explanations given to were necessary for the purposes of our audit; us:
(b) in our opinion, proper books of account as required by law i. the Company doesn’t have any pending litigations which have been kept by the Company so far as it appears from our would impact its financial position; examination of those books; ii. the Company did not have any long-term contracts, (c) the Balance sheet, the Statement of profit and loss, the including derivative contracts, for which there were any Statement of cash flows and the Statement of changes in material foreseeable losses; equity dealt with by this report are in agreement with the books of account; iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund (d) in our opinion, the aforesaid Ind AS financial statements by the Company; and comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act; iv. the disclosures regarding details of specified bank notes held and transacted during 8 November 2016 (e) on the basis of the written representations received from the to 30 December 2016 has not been made since the directors as on 31 March 2018 and taken on record by the requirement does not pertain to financial year ended 31 board of directors, none of the directors are disqualified as on March 2018. 31 March 2018 from being appointed as a director in terms of Section 164 (2) of the Act; For B S R & Co. LLP Chartered Accountants (f) with respect to the adequacy of the internal financial controls Firm’s Registration No: 101248W/W-100022 with reference to the financial statements of the Company and the operating effectiveness of such controls, refer to our Rishabh Kumar separate Report in “Annexure B”; and Place: Mumbai Partner Date: 28th May, 2018 Membership No: 402877 64 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 65
Annexure A to the Independent Auditor’s Report – 31 March 2018
With reference to the Annexure A referred to in the Independent (vi) According to the information and explanations given to us, Auditor’s Report to the members of the Company on the Ind AS the Central Government has not prescribed the maintenance financial statements for the year ended 31 March 2018, we report of cost records under Section 148(1) of the Act for any of the the following: products of the Company. Accordingly, paragraph 3(vi) of the Order is not applicable to the Company. (i) (a) According to the information and explanation given to us, the Company has maintained proper records (vii) (a) According to the information and explanations given to showing full particulars, including quantitative details us and on the basis of our examination of the records and situation of fixed assets. of the Company, amounts deducted / accrued in the books of account in respect of undisputed statutory dues (b) The Company has a regular programme of physical including provident fund, employees state insurance verification of its fixed assets by which all the fixed assets fund, profession tax, income-tax, duty of customs, value are verified annually. In our opinion, this periodicity of added tax, goods and service tax, cess and other material physical verification is reasonable having regard to the statutory dues have been regularly deposited during the size of the Company and the nature of its assets. In our year with the appropriate authorities, except in case of opinion and according to information and explanations advance income tax where there are significant delays. given to us, no material discrepancies were noticed upon such verification during the year. According to the information and explanations given to us, no undisputed amounts payable in respect (c) According to the information and explanations given to of provident fund, employees state insurance fund, us and on the basis of our examination of the records of profession tax, duty of customs, value added tax, goods the Company, the title deeds of immovable properties of and service tax, cess and other material statutory dues buildings as disclosed in Note 3 to the Ind AS financial were in arrears as at 31 March 2018 for a period of statements, are held in the name of the Company. more than six months from the date they became payable except for the following dues of income-tax. (ii) The inventory, except for stocks lying with third parties, has been physically verified by the management during the year. In Name of the Amount in ` Assessment Nature of dues Due date our opinion, the frequency of such verification is reasonable. statute Lakh year In respect of stocks lying with third parties at the year-end, Income-tax Advance tax for the 27 2018-19 Not Paid written confirmations have been obtained. The discrepancies Act, 1961 quarter ended 30 noticed on verification between the physical stocks and the June 2017 book records were not material. Income-tax Advance tax for the 54 2018-19 Not Paid Act, 1961 quarter ended 30 (iii) According to the information and explanations given to us the September 2017 Company has not granted any loans, secured or unsecured, to Income tax Advance tax for the 54 2018-19 Not Paid companies, firms, limited liability partnerships or other parties Act, 1961 quarter ended 31 covered in the register maintained under Section 189 of the December 2017 Companies Act, 2013 (‘the Act’). Accordingly, paragraphs The total advance tax pertaining to AY 2018-19 for `130 Lakh is 3 (iii) (a), (b) and (c) of the Order are not applicable to the yet to be deposited with the relevant authorities Company. (b) According to the information and explanations given (iv) According to the information and explanation given to us, the to us, there are no dues of income-tax, value added Company has not granted any loans, made any investments tax, duty of customs, goods and service tax and other or provided any guarantees or security to the parties covered material statutory dues which have not been deposited under Section 185 and 186 of the Act.. Accordingly, with the appropriate authorities on account of any paragraph 3(iv) of the Order is not applicable to the Company. dispute.
(v) According to the information and explanations given to us, (viii) According to the information and explanations given to us, the Company has not accepted deposits as per the directives the Company has not defaulted in repayment of loans to issued by the Reserve Bank of India and the provisions of bank. The Company did not have any dues to any financial Sections 73 to 76 or any other relevant provisions of the Act institutions and nor it has issued any debentures during and the rules framed thereunder. Accordingly, paragraph 3 (v) the year. Accordingly, paragraph 3(iv) of the Order is not of the Order is not applicable to the Company. applicable to that extent to the Company. 64 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 65
(ix) According to the information and explanations given to us and of such related parties transactions have been disclosed in based on our examination of the records of the Company, the the Ind AS financial statements as required under Indian Company has not raised any moneys by way of initial public Accounting Standard (Ind AS 24), Related Party Disclosures offer or further public offer (including debt instruments) and specified under Section 133 of the Act, read with Rule 4 of the has not obtained any term loans during the year. Accordingly, Companies (Accounts) Rules, 2015, as amended. paragraph 3 (ix) of the Order is not applicable to the Company. (xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the (x) During the course of our examination of the books and records Company has not made any preferential allotment or private of the Company, carried out in accordance with the generally placement of shares or fully or partly convertible debentures accepted auditing practices in India, and according to the during the year. Accordingly, paragraph 3 (xiv) of the Order is information and explanations given to us, we have neither not applicable to the Company. come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or (xv) According to the information and explanations given to reported during the year, nor have we been informed of any us and based on our examination of the records of the such case by the management. Company, the Company has not entered into any non-cash transactions with directors or persons connected with them. (xi) According to the information and explanations given to us and Accordingly, paragraph 3 (xv) of the Order is not applicable based on our examination of the records of the Company, the to the Company. Company has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the (xvi) According to the information and explanations given to us, provisions of Section 197 read with Schedule V of the Act. the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, (xii) In our opinion and according to the information and paragraph 3 (xvi) of the Order is not applicable to the explanations given to us, the Company is not a Nidhi Company. company and the Nidhi Rules, 2014 are not applicable to it. Accordingly, paragraph 3 (xii) of the Order is not applicable For B S R & Co. LLP to the Company. Chartered Accountants Firm’s Registration No: 101248W/W-100022 (xiii) According to the information and explanations given to us and based on our examination of the records of the Company, Rishabh Kumar transactions with the related parties are in compliance with Place: Mumbai Partner Sections 177 and 188 of the Act where applicable. The details Date: 28th May, 2018 Membership No: 402877 66 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 67
Annexure B to the Independent Auditor’s Report – 31 March 2018 (Referred to in our report of even date)
Report on the Internal Financial Controls under Clause (i) of perform the audit to obtain reasonable assurance about whether Sub-section 3 of Section 143 of the Companies Act, 2013 adequate internal financial controls with reference to financial (“the Act”) statements was established and maintained and if such controls operated effectively in all material respects. We have audited the internal financial controls with reference to the financial statements of The Mandhana Retail Ventures Limited (“the Our audit involves performing procedures to obtain audit evidence Company”) as of 31 March 2018 in conjunction with our audit of about the adequacy of the internal financial controls system with the Ind AS financial statements of the Company for the year ended reference to financial statements and their operating effectiveness. on that date. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal Management’s Responsibility for Internal financial controls with reference to financial statements, assessing Financial Controls the risk that a material weakness exists, and testing and evaluating The Company’s management is responsible for establishing and the design and operating effectiveness of internal controls based on maintaining internal financial controls based on the internal controls the assessed risk. The procedures selected depend on the auditor’s with reference to financial statements criteria established by the judgment, including the assessment of the risks of material Company considering the essential components of internal controls misstatement of the Ind AS financial statements, whether due to stated in the Guidance Note on Audit of Internal Financial Controls fraud or error. over Financial Reporting (the “Guidance note”) issued by the Institute of Chartered Accountants of India (“ICAI”). These responsibilities We believe that the audit evidence we have obtained is sufficient include the design, implementation and maintenance of adequate and appropriate to provide a basis for our audit opinion on the internal financial controls that were operating effectively for Company’s internal financial control system with reference to ensuring the orderly and efficient conduct of its business, including financial statements. adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and Meaning of Internal Financial Controls with completeness of the accounting records, and the timely preparation reference with Financial Reporting of reliable financial information, as required under the Act. A company’s internal financial controls with reference to financial statements is a process designed to provide reasonable assurance Auditor’s Responsibility regarding the reliability of financial reporting and the preparation Our responsibility is to express an opinion on the Company’s of financial statements for external purposes in accordance with internal financial controls with reference to financial statements generally accepted accounting principles. A company’s internal based on our audit. We conducted our audit in accordance with financial controls with reference to financial statements includes the Guidance Note and the Standards on Auditing, issued by ICAI those policies and procedures that (1) pertain to the maintenance and deemed to be prescribed under Section 143 (10) of the Act, of records that, in reasonable detail, accurately and fairly reflect to the extent applicable to an audit of internal financial controls, the transactions and dispositions of the assets of the company; both applicable to an audit of Internal Financial Controls and, (2) provide reasonable assurance that transactions are recorded both issued by the ICAI. Those Standards and the Guidance Note as necessary to permit preparation of financial statements in require that we comply with ethical requirements and plan and accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only 66 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 67
in accordance with authorisations of management and directors Opinion of the company; and (3) provide reasonable assurance regarding In our opinion, the Company has, in all material respects, an prevention or timely detection of unauthorised acquisition, use, adequate internal financial control system with reference to financial or disposition of the company’s assets that could have a material statements and such internal financial controls with reference to effect on the financial statements. financial statements were operating effectively as at 31 March Inherent Limitations of Internal Financial Controls 2018, based on the internal controls with reference to financial with reference with Financial Reporting statements criteria established by the Company considering the essential components of internal controls stated in the Guidance Because of the inherent limitations of internal financial controls Note issued by ICAI. with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. For B S R & Co. LLP Chartered Accountants Also, projections of any evaluation of the internal financial controls Firm’s Registration No: 101248W/W-100022 with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to Rishabh Kumar financial statements may become inadequate because of changes Place: Mumbai Partner in conditions, or that the degree of compliance with the policies or Date: 28th May, 2018 Membership No: 402877 procedures may deteriorate. 68 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 69
Balance sheet as at 31 March 2018
(` In Lakh) As at As at As at Note 31 March 2018 31 March 2017 1 April 2016 I. Assets (1) Non-current assets (a) Property, Plant and Equipment 3 2,564.72 2,442.61 2,421.05 (b) Capital work-in-progress 3 0.76 4.06 - (c) Intangible assets 4 39.97 43.45 46.80 (d) Financial assets (i) Non-current loans 5 145.55 190.48 222.93 (e) Deferred tax assets (net) 32 955.85 1,341.43 990.49 (f) Other non-current assets 6 129.20 108.62 93.06 (g) Non-current tax assets 23.66 63.91 40.24 Total non-current assets 3,859.71 4,194.56 3,814.57 (2) Current assets (a) Inventories 7 5,484.68 6,131.98 5,678.25 (b) Financial assets (i) Trade receivables 8 1,991.64 1,371.10 1,962.25 (ii) Cash and cash equivalents 9 145.01 45.58 18.45 (iii) Current loans 10 1,531.27 1,403.28 1,208.04 (iv) Other current financial assets 11 65.03 94.42 49.37 (c) Other current assets 12 355.92 69.80 109.67 Total current assets 9,573.55 9,116.16 9,026.03 Total Assets 13,433.26 13,310.72 12,840.60 II. Equity and Liabilities (1) Equity (a) Equity share capital 13 2,208.26 2,208.26 5.00 (b) Other equity 14 4,533.78 3,620.68 4,416.69 Total equity 6,742.04 5,828.94 4,421.69 (2) Non-current liabilities (a) Financial liabilities (i) Non-current borrowings 15 - - 212.56 (ii) Other non-current financial liabilities 16 103.54 274.58 252.54 (b) Non-current provisions 17 59.16 53.69 - (c) Other non-current liabilities 18 8.06 18.24 41.44 Total non-current liabilities 170.76 346.51 506.54 (3) Current liabilities (a) Financial liabilities (i) Current borrowings 19 750.46 591.20 529.68 (ii) Trade payables 20 4,357.59 4,120.39 2,967.74 (iii) Other current financial liabilities 21 1,065.82 913.16 1,994.86 (b) Other current liabilities 22 183.82 148.31 182.47 (c) Current provisions 23 11.85 0.83 - (d) Liabilities for current tax (net) 24 150.92 1,361.38 2,237.62 Total current liabilities 6,520.46 7,135.27 7,912.37 Total liabilities 6,691.22 7,481.78 8,418.91 Total Equity And Liabilities 13,433.26 13,310.72 12,840.60 Significant accounting policies 2 Notes to the financial statements 3-48 The notes referred above form an integral part of the financial statements. As per our report of even date attached. For B S R & Co. LLP For and on behalf of the Board of Directors of Chartered Accountants The Mandhana Retail Ventures Limited Firm’s Registration No: 101248W/W-100022 (formerly known as Mandhana Retail Ventures Limited) CIN: L52390MH2011PLC213349
Rishabh Kumar Sangeeta M. Mandhana Priyavrat Mandhana Partner Managing Director Executive Director Membership No: 402877 DIN: 06934972 DIN: 02446722
Hemant Gupta Virendra Varma Mumbai Chief Financial Officer Company Secretary 28 May 2018 Membership No: 501212 Membership No: 30786 68 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 69
Statement of profit and loss for the year ended 31 March 2018
(` In Lakh) Year ended Year ended Note 31-Mar-18 31-Mar-17 Revenue I. Revenue from Operations 25 25,944.93 25,958.80 II. Other income 26 128.78 177.38 III. Total Income (I+II) 26,073.71 26,136.18 Expenses Purchase of stock-in-trade 27 10,434.30 10,836.41 Changes in inventories of stock-in-trade 28 647.30 (453.73) Employee Benefits Expenses 29 2,489.05 2,015.80 Finance costs 30 177.24 240.10 Depreciation and Amortization Expenses 3,4 367.36 340.02 Other Expenses 31 10,407.32 10,875.44 IV. Total Expenses 24,522.57 23,854.04 V. Profit before Tax (III-IV) 1,551.14 2,282.14 VI. Tax expense: 32 1. Current Tax 181.00 1,240.00 2. Deferred Tax 380.08 (355.84) 3. Adjustment of tax for earlier years 87.34 - VII. Profit for the period 902.72 1,397.98 VIII. Other comprehensive income (i) Items that will not be reclassified to profit or loss - Remeasurement of defined benefit plans 15.88 14.17 (ii) Income tax related to items that will not be reclassified to profit or loss 32 (5.50) (4.90) 10.38 9.27 IX. Total comprehensive income for the year 913.10 1,407.25 X. Earnings per equity share 1. Basic 4.09 6.33 2. Diluted 4.09 6.33 Significant accounting policies 2 Notes to the financial statements 3-48 The notes referred above form an integral part of the financial statements. As per our report of even date attached. For B S R & Co. LLP For and on behalf of the Board of Directors of Chartered Accountants The Mandhana Retail Ventures Limited Firm’s Registration No: 101248W/W-100022 (formerly known as Mandhana Retail Ventures Limited) CIN: L52390MH2011PLC213349
Rishabh Kumar Sangeeta M. Mandhana Priyavrat Mandhana Partner Managing Director Executive Director Membership No: 402877 DIN: 06934972 DIN: 02446722
Hemant Gupta Virendra Varma Mumbai Chief Financial Officer Company Secretary 28 May 2018 Membership No: 501212 Membership No: 30786 70 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 71
Statement of cash flow for the year ended 31 March 2018
(` In Lakh)
For the year ended For the year ended 31 March 2018 31 March 2017 (A) Cash flow from operating activities Net profit before taxation 1,551.14 2,282.14 Adjustments for: Depreciation and amortisation 367.36 340.02 Interest income (0.16) (10.74) Finance costs 177.24 (28.07) Interest on income-tax 8.64 268.17 Acturial gain/loss reclassified 15.88 14.17 Loss on sale of fixed assets 27.83 - Operating cash flows before working capital changes 2,147.93 2,865.69 Working capital adjustments (Decrease)/ increase in other non-current financial liabilities (171.04) 22.04 (Decrease)/ increase in other non-current liabilities (10.18) (23.20) Increase in provisions 16.49 54.52 Increase in trade payables 237.20 1,152.65 (Decrease)/ increase in other current financial liabilities 343.49 (33.02) (Decrease)/ increase in other current liabilities 35.51 (34.16) (Increase) in non-current loans 44.93 32.45 (Increase) in other non-current assets 14.60 (15.56) Decrease/ (increase) in inventories 647.30 (453.73) (Increase) in trade receivables (620.54) 591.15 (Increase)/ decrease in other current financial assets 29.39 (45.03) (Increase)/ decrease in other current assets (286.12) 39.87 (Increase) in current loans (127.99) (195.24) 2,300.97 3,958.43 Income Tax paid (1,447.19) (2,408.08) Net cash inflow from operating activities 853.78 1,550.35 (B) Cash flow from investing activities Purchase for property, plant and equipment including expenditure on capital WIP and capital advances (529.70) (362.29) Proceeds from sale of property, plant and equipment 10.12 - Interest received 0.16 10.72 Net cash outflow from investing activities (519.42) (351.57) (C) Cash flow from financing activities Repayment of borrowings (216.95) (1,250.01) Proceeds from loans and borrowings 159.26 61.52 Finance charges paid (177.24) 16.84 Net cash outflow from financing activities (234.93) (1,171.65) Net increase in cash and cash equivalents 99.43 27.13 Cash and cash equivalents at the beginning of the year 45.58 18.45 Cash and cash equivalents at the end of the year 145.01 45.58 Reconciliation of Cash and Cash equivalents with the Balance Sheet Cash and Bank Balances as per Balance Sheet [Note 9] 145.01 45.58 Cash and Cash equivalents as at the year end 145.01 45.58 The above Cash Flow Statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (IND AS) 7 -”Cash Flow Statements”. Cash comprises cash on hand, Current Accounts and deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. The accompanying notes form an integral part of these Financial Statements
As per our report of even date attached. For B S R & Co. LLP For and on behalf of the Board of Directors of Chartered Accountants The Mandhana Retail Ventures Limited Firm’s Registration No: 101248W/W-100022 (formerly known as Mandhana Retail Ventures Limited) CIN: L52390MH2011PLC213349
Rishabh Kumar Sangeeta M. Mandhana Priyavrat Mandhana Partner Managing Director Executive Director Membership No: 402877 DIN: 06934972 DIN: 02446722
Hemant Gupta Virendra Varma Mumbai Chief Financial Officer Company Secretary 28 May 2018 Membership No: 501212 Membership No: 30786 70 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 71
Statement of Changes in Equity (SOCIE) for the year ended 31 March 2018
(a) Equity share capital (` In Lakh) As at 31 March 2018 As at 31 March 2017 As at 1 April 2016 No. of Shares Amount No. of Shares Amount No. of Shares Amount Balance at the beginning of the 2,20,82,609 2,208.26 50,000 5.00 - - reporting year balance Shares cancelled during the year - - (50,000) (5.00) - - (refer note 13) Issue of equity share capital - - 2,20,82,609 2,208.26 - - (refer note 13) Balance at the end of the reporting 2,20,82,609.00 2,208.26 2,20,82,609 2,208.26 50,000 5.00 year
(b) Other equity (` In Lakh) Reserves & Surplus Other Total Other Equity comprehensive Particulars income Capital Reserve Retained earnings Balance at 1 April 2016 2,208.26 2,208.43 - 4,416.69 Profit for the year - 1,397.98 - 1,397.98 Remeasurements of post-employment benefit obligation, net of tax - - 9.27 9.27 Total comprehensive income for the year - 1,397.98 9.27 1,407.25 Shares cancelled pursuant to demerger (refer note 13) 5.00 - - 5.00 Issue of equity share capital (refer note 13) (2,208.26) - - (2,208.26) Balance at 31 March 2017 5.00 3,606.41 9.27 3,620.68 Profit for the year - 902.72 - 902.72 Remeasurements of post-employment benefit obligation, net of tax - - 10.38 10.38 Total comprehensive income for the year - 902.72 10.38 913.10 Balance at 31 March 2018 5.00 4,509.13 19.65 4,533.78
As per our report of even date. For B S R & Co. LLP For and on behalf of the Board of Directors of Chartered Accountants The Mandhana Retail Ventures Limited Firm’s Registration No: 101248W/W-100022 (formerly known as Mandhana Retail Ventures Limited) CIN: L52390MH2011PLC213349
Rishabh Kumar Sangeeta M. Mandhana Priyavrat Mandhana Partner Managing Director Executive Director Membership No: 402877 DIN: 06934972 DIN: 02446722
Hemant Gupta Virendra Varma Mumbai Chief Financial Officer Company Secretary 28 May 2018 Membership No: 501212 Membership No: 30786 72 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 73
Notes to the Financial Statements for the year ended 31 March 2018
1. Company overview The financial statements of the Company for the year ended 31st March, 2018 were approved for issue in accordance The Mandhana Retail Ventures Limited (formerly known as with the resolution of the Board of Directors on 28 May 2018. Mandhana Retail Ventures Limited) (“the Company”) was incorporated under the Companies Act, 1956 (“the Act”) on b) Historical cost convention 12 February 2011. The Company has been converted into The financial statements have been prepared on a historical a public limited company by getting its shares listed on the cost basis, except for the following: Bombay Stock Exchange and the National Stock Exchange w.e.f. 14 December 2016. The Company is engaged in the • certain financial assets and liabilities that are measured business of designing, retailing, marketing and distributing at fair value; men’s wear, women’s wear and accessories under “Being Human” trademark. • defined benefit plans – net defined benefit obligation measured at present value of benefits payable Pursuant to the approval of the scheme of demerger, the Company has acquired the demerged undertaking of c) Functional and presentation currency Mandhana Industries Limited (“MIL”) which was engaged in Items included in the financial statements of the Company the above mentioned business under the global exclusive are measured using the currency of the primary economic trademark license agreement with The Salman Khan environment in which the entity operates (‘the functional Foundation. currency’). The financial statements are presented in Indian Rupee (`), which is the Company’s functional and presentation The Salman Khan Foundation has entered into a new currency. All amounts disclosed in the financial statements agreement with the Company till 31 March 2020 to be its and notes have been rounded off to the nearest Lakh as per global license partner. the requirement of Division II of Schedule III to the Companies 2A. Basis of preparation Act, 2013, unless otherwise stated. a) Statement of compliance d) Critical accounting judgments and key sources of These financial statements of the Company for the year ended estimation uncertainty 31 March, 2018 along with comparative financial information The preparation of the financial statements in conformity with for the year 31 March, 2017 and Opening Balance Sheet as Ind AS requires management to make judgments, estimates at April 1, 2016 have been prepared in accordance with the and assumptions that affect the application of accounting Indian Accounting Standards (hereinafter referred to as the policies and the reported amounts of assets, liabilities, ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant income and expenses. Uncertainty about these assumptions to Section 133 of the Companies Act, 2013 (‘Act’) read with and estimates could result in outcomes that require material Rule 3 of the Companies (Indian Accounting Standards) Rules, adjustments to the carrying amount of assets or liabilities 2015 as amended and other relevant provisions of the Act. affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently The financial statements for the year ended 31 March 2018 available information. Revisions to accounting estimates are are the first year the Company has prepared in accordance recognized prospectively in the Statement of Profit and Loss in with Ind AS and are covered by Ind AS 101, first-time adoption the period in which the estimates are revised and in any future of Indian Accounting Standards. The transition to Ind AS has periods affected. The Management believes that the estimates been carried out from the accounting principles generally used in preparation of the Financial Statements are prudent accepted in India (“Indian GAAP”) which is considered as the and reasonable. . “Previous GAAP” for purposes of Ind AS 101. An explanation of how the transition to Ind AS has affected the Company’s The areas involving critical estimates and judgments are: equity and its net profit is provided in Note 45. i. Property, plant and equipment : Determination of the estimated useful lives of property, The financial statements have been prepared on accrual and plant and equipment and the assessment of components going concern basis. The accounting policies are applied of the cost that may be capitalised. Useful lives of tangible consistently to all the periods presented in the financial assets are based on the life prescribed in Schedule II of statements, including the preparation of the opening Ind the Companies Act, 2013. In cases, where the useful AS Balance Sheet as at 1st April, 2016 being the ‘date of lives are different from that prescribed in Schedule II, transition to Ind AS’. they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history 72 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 73
Notes to the Financial Statements for the year ended 31 March 2018
of replacement, anticipated technological changes, iii. it is expected to be realized within twelve months after the manufacturers’ warranties and maintenance support. reporting date; or Assumptions also need to be made, when the Company assesses, whether an asset may be capitalised and which iv. it is cash or cash equivalent unless it is restricted from components of the cost of the asset may be capitalised. being exchanged or used to settle a liability for at least twelve months after the reporting date. ii. Valuation of inventories V aluation of inventories, comprising the stock-in-trade Current assets include the current portion of non-current at every reporting period end. Net realizable value of financial assets. inventories is estimated basis the selling price in the ordinary course of business, less the estimated costs All other assets are classified as non-current. necessary to make the sale. Liabilities iii. Defined benefit obligations : A liability is classified as current when it satisfies any of the The obligation arising from defined benefit plan is following criteria: determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends i. it is expected to be settled in the Company’s normal in salary escalation and vested future benefits and life operating cycle; expectancy. The discount rate is determined based on the prevailing market yields of Indian Government ii. it is held primarily for the purpose of being traded; Securities as at the Balance Sheet Date for the estimated term of the obligations. iii. it is due to be settled within twelve months after the reporting date; or iv. Deferred tax assets: A deferred tax asset is recognised for all the deductible iv. the Company does not have an unconditional right to temporary differences to the extent that it is probable defer settlement of the liability for at least twelve months that taxable profit will be available against which the after the reporting date. deductible temporary difference can be utilised Current liabilities include the current portion of non-current v. Provisions and contingencies: financial liabilities. The recognition and measurement of other provisions are based on the assessment of the probability of an All other liabilities are classified as non-current. outflow of resources, past experience and circumstances known at the balance sheet date. Operating cycle Based on the nature of services and the time between the vi. Financial instruments: acquisition of assets for processing and their realization in All financial instruments are required to be measured cash and cash equivalents, the Company has ascertained its at fair value on initial recognition. In case of financial operating cycle as 12 months for the purpose of current – instruments which are required to be subsequently non-current classification of assets and liabilities. measured at amortised cost, interest is accrued using the effective interest rate. Rate of interest is estimated basis 2B. Summary of significant accounting policies the prevailing market interest rate or the rate applicable a) Revenue recognition to the company on any other financial instrument. Sale of goods Revenue is recognised to the extent it is probable that e) Classification of assets and liabilities economic benefits will flow to the Company, the revenue can All assets and liabilities are classified into current and non- be reliably measured and no significant uncertainty as to the current. measurability and collectability exists. Assets An asset is classified as current when it satisfies any of the Revenue from sale of goods in the ordinary activities is following criteria: recognized when all significant risks and rewards of their ownership are transferred to the customer and no significant i. it is expected to be realized in, or is intended for sale or uncertainty exists regarding the amount of the consideration consumption in, the Company’s normal operating cycle; that will be derived from the sale of the goods and regarding the collection. The amount recognized as revenue is exclusive ii. it is held primarily for the purpose of being traded; 74 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 75
Notes to the Financial Statements for the year ended 31 March 2018
of sales tax and goods and services tax and is net of returns, iv. Depreciation trade discounts and rebates. Depreciation is provided on a pro-rata basis on the written down value method (‘WDV’) as per the useful life prescribed Export incentives are recognized in the year on the basis of under Schedule II of the Companies Act, 2013, which, in claims submitted to the appropriate authorities provided there management’s opinion, reflect the estimates useful economic is no uncertainty to expect ultimate collection at the time of lives of fixed assets. making the claim. Leasehold improvements are amortized over the lease term. Interest income Depreciation for the year is recognised in the Statement of F or all interest bearing financial assets measured at amortized Profit and Loss. cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated The following table gives the useful life of different Property, future cash receipts over the expected life of the financial plant and equipment as per Schedule II: instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. Particulars Useful Life Office equipment 5 years b) Property, Plant and Equipment Furniture and fixtures 10 years i. Recognition and Measurement Computer servers and network 6 years Items of property, plant and equipment (PPE) are stated Desktops/laptops and accessories 3 years at acquisition cost, net of accumulated depreciation and Air conditioners 5 years accumulated impairment losses, if any. The cost of an item of PPE comprises its purchase price, including import duties v. De-recognition and other non-refundable taxes or levies, borrowing costs if An item of property, plant and equipment is eliminated from any and any directly attributable cost of bringing the asset to the financial statement on disposal or when no further benefit its working condition for its intended use. Any trade discounts is expected from its use and disposal. and rebates are deducted in arriving at the purchase price. Losses arising from retirement or gains or losses arising Expenditure/ Income during construction period is included from disposal of fixed assets which are carried at cost are under Capital Work-in-Progress, and the same is allocated recognised in the statement of profit and loss. to the respective PPE on the completion of their construction. Advances given towards acquisition or construction of PPE vi. Impairment of property, plant and equipment outstanding at each reporting date are disclosed as Capital The carrying values of assets at each balance sheet date are Advances under “Other non-current Assets”. reviewed for impairment if any indication of impairment exists.
If significant parts of an item of property, plant and equipment c) Intangible assets have different useful lives, then they are accounted for as i. Recognition and Measurement separate items (major components) of property, plant and Intangible assets are recognized only when it is probable equipment. that the future economic benefits that are attributable to the assets will flow to the Company and the cost of such assets ii. Subsequent expenditure can be measured reliably. Intangible assets that are acquired Subsequent expenditures related to an item of property, by the Company are measured initially at cost. After initial plant and equipment are added to its book value only if they recognition, an intangible asset is carried at its cost less any increase the future benefits from the existing asset beyond its accumulated amortisation and any accumulated impairment previously assessed standard of performance. loss. All costs relating to the acquisition are capitalized. iii. Transition to Ind AS ii. Subsequent expenditure On transition to Ind AS, the Company has elected to continue Subsequent expenditure is capitalised only when it increases with the carrying value of all its property, plant and equipment the future economic benefits from the specific asset to which it recognized in the financial statements as at the date of relates. transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant iii. Transition to Ind AS to the exemption under Ind AS 101.. On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognized as at 1 April 2016 (transition date) measured as per the 74 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 75
Notes to the Financial Statements for the year ended 31 March 2018
previous GAAP and use that as its deemed cost as at date of provided that this amount does not exceed the carrying amount transition. that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been iv. Amortisation recognized for the asset in prior years. In case of revalued Intangible assets are amortised over their estimated useful assets, such reversal is not recognized. lives, from the date that they are available for use based on the expected pattern of consumption of economic benefits d) Leases of the asset. The Company’s intangible assets comprise of Assets acquired under leases other than finance leases computer software which are being amortised over their are classified as operating leases. The total lease rentals estimated useful life of three years. (including scheduled rental increases) in respect of an asset taken on operating lease are charged to the Statement of The useful lives are reviewed by the management at each Profit and Loss on a straight line basis over the lease term financial year-end and revised, if appropriate. In case of a (including the rent free period) unless the payments to lessor revision, the unamortized depreciable amount is charged are structured to increase in line with expected general over the revised remaining useful life. inflation to compensate for the lessor’s expected inflationary cost increases. Initial direct costs of leasehold improvement Amortisation for the year is recognised in the statement of incurred specifically for an operating lease are deferred and profit and loss. charged to the Statement of Profit and Loss over the lease term. v. De-recognition An intangible asset is de-recognised on disposal or when e) Inventories no future economic benefits are expected from its use and Inventories comprise of stock-in-trade which are carried at the disposal. Losses arising from retirement and gains or losses lower of cost and net realizable value. Cost is determined on arising from disposal of an intangible asset are measured first in first out (“FIFO”) basis. as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Cost of stock-in-trade comprises of all costs of purchase, statement of profit and loss. duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the vi. Impairment of Intangible assets inventory to their present location and condition. Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, Net realizable value is the estimated selling price in the or more frequently if events or changes in circumstances ordinary course of business, less the estimated costs necessary indicate that they might be impaired. Other assets are tested to make the sale. for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. f) Foreign currency transactions Management periodically assesses using, external and Transactions denominated in foreign currency are recorded internal sources, whether there is an indication that an asset at the exchange rate prevailing on the date of transactions. may be impaired. Exchange differences arising on foreign exchange transactions settled during the period are recognized in the statement of An impairment loss is recognised if the carrying amount of profit and loss of the period. an asset exceeds its recoverable amount. The recoverable amount is higher of the asset’s net selling price or value Monetary assets and liabilities in foreign currency, which are in use, which means the present value of future cash flows outstanding as at the year-end, are translated at the year- expected to arise from the continuing use of the asset and its end at the closing exchange rate and the resultant exchange eventual disposal. The impairment loss is recognized as an differences are recognized in the statement of profit and loss. expense in the Statement of Profit and Loss, unless the asset Non-monetary foreign currency items are carried at cost. is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease g) Financial instruments to the extent a revaluation reserve is available for that asset. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity An impairment loss for an asset is reversed if, and only if, the instrument of another entity. reversal can be related objectively to an event occurring after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, 76 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 77
Notes to the Financial Statements for the year ended 31 March 2018
i. Financial assets The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during Classification which the change has occurred. The Company shall classify financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss Subsequent Measurement on the basis of its business model for managing the financial The Company classifies financial assets as subsequently assets and the contractual cash flow characteristics of the measured at amortised cost, fair value through other financial asset. comprehensive income (“FVOCI”) or fair value through profit or loss (“FVTPL”) on the basis of following: Initial recognition and measurement • The entity’s business model for managing the financial F inancial assets are recognised when the Company becomes assets and a party to a contract that gives rise to a financial asset of one entity or equity instrument of another entity. Financial assets • The contractual cash flow characteristics of the financial are initially measured at fair value. Transaction costs that are asset. directly attributable to the acquisition or issue of financial assets, other than those designated as fair value through profit or loss (FVTPL), are added to or deducted from the fair value Amortised Cost of the financial assets, as appropriate, on initial recognition. A financial asset shall be classified and measured at amortised Transaction costs directly attributable to the acquisition of cost if both of the following conditions are met: financial assets at FVTPL are recognised immediately in statement of profit and loss. • The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and Measurement of fair values The Company measures financial instruments at fair value in • The contractual terms of the financial asset give rise on accordance with the accounting policies mentioned above. specified dates to cash flows that are solely payments of Fair value is the price that would be received to sell an asset principal and interest on the principal amount outstanding. or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction De-recognition to sell the asset or transfer the liability takes place either: A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is - in the principal market of the asset or liability; or primarily derecognised (i.e. removed from the Company’s balance sheet) when: - in the absence of a principal market, in the most advantageous market for the asset or liability. i. The rights to receive cash flows from the asset have expired, or All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the ii. The Company has transferred its rights to receive cash fair value hierarchy that categorizes financial assets into three flows from the asset or has assumed an obligation to pay levels. As described as follows, these levels are based on the the received cash flows in full without material delay to inputs to valuation techniques used to measure fair value. The a third party under a ‘pass-through’ arrangement; and fair value hierarchy gives highest priority to quoted prices in either active markets for identical assets or liabilities (Level 1 inputs) and lowest priority to unobservable inputs (level 3 inputs). (a) The Company has transferred substantially all the risks and rewards of the asset, or Level 1: Fair value based on quoted, unadjusted prices on active markets (b) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but Level 2: Fair value based on parameters for which directly or has transferred control of the asset. indirectly quoted prices on active market are available When the Company has transferred its rights to receive Level 3: Fair value based on parameters for which there is no cash flows from an asset or has entered into a pass- observable market data through arrangement, it evaluates if and to what extent 76 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 77
Notes to the Financial Statements for the year ended 31 March 2018
it has retained the risks and rewards of ownership. When De-recognition it has neither transferred nor retained substantially all of A financial liability is derecognised when the obligation under the risks and rewards of the asset, nor transferred control the liability is discharged or cancelled or expires. When an of the asset, the Company continues to recognize existing financial liability is replaced by another from the same the transferred asset to the extent of the Company’s lender on substantially different terms, or the terms of an continuing involvement. In that case, the Company also existing liability are substantially modified, such an exchange recognises an associated liability. The transferred asset or modification is treated as the de-recognition of the original and the associated liability are measured on a basis that liability and the recognition of a new liability. The difference in reflects the rights and obligations that the Company has the respective carrying amounts is recognised in the statement retained. of profit and loss.
Continuing involvement that takes the form of a Offsetting of financial instruments guarantee over the transferred asset is measured at the Financial assets and financial liabilities are offset and the net lower of the original carrying amount of the asset and the amount is reported in the balance sheet if there is a currently maximum amount of consideration that the Company enforceable legal right to offset the recognised amounts and could be required to repay. there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. Impairment of financial assets F inancial assets of the Company comprise of trade receivable h) Employee benefits and other receivables consisting of debt instruments i. Short-term employee benefits such as security deposits and bank balance. Trade and Employee benefits payable wholly within twelve months of other receivables are recognised initially at fair value and rendering the service are classified as short-term employee subsequently measured at amortised cost using the effective benefits. These benefits include salaries and wages, bonus interest method, less provision for impairment. An impairment and ex-gratia. The undiscounted amount of short-term loss for trade and other receivables is established when there employee benefits expected to be paid in exchange for the is objective evidence that the Company will not be able to employee service is recognized as an expense as the related collect all amounts due according to the original terms of service is rendered by the employee. A liability is recognised the receivables. Impairment losses if any, are recognised in for the amount expected to be paid if the Company has a statement of profit and loss for the period. present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the ii. Financial liabilities obligation can be estimated reliably. Classification ii. Post-employment benefits The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at Defined contribution plans fair value through profit or loss. A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Initial recognition and measurement Company makes specified monthly contributions towards All financial liabilities are recognised initially at fair value and, employee provident fund to Government administered in the case of loans and borrowings and payables, net of provident fund scheme which is a defined contribution plan. directly attributable transaction costs. The Company’s contribution to Provident Fund, ESIC and Labour Welfare Fund are recognised as an expense in the L oans and borrowings Statement of Profit and Loss during the period in which the After initial recognition, interest-bearing loans and borrowings employee renders related service. are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit Defined Benefit Plan and loss when the liabilities are derecognized. Amortised cost The Company’s gratuity benefit scheme is a defined benefit is calculated by taking into account any discount or premium plan covering eligible employees in accordance with on acquisition and fees or costs that are an integral part of the the Payment of Gratuity Act, 1972. The Company’s net EIR. The EIR amortisation is included as finance costs in the obligation in respect of the defined benefit plan is calculated statement of profit and loss. by estimating the amount of future benefit that employees have earned in return for their service in the current and 78 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 79
Notes to the Financial Statements for the year ended 31 March 2018
prior periods; that benefit is discounted to determine its j) Earnings per share (‘EPS’) present value. Any unrecognized past service costs and the Basic and diluted earnings per share are computed by fair value of any assets are deducted. The calculation of the dividing the net profit attributable to equity shareholders Company’s obligation under the plans is performed annually for the year, by the weighted average number of equity by a qualified actuary using the projected unit credit method shares outstanding during the year. at the balance sheet date. Diluted earnings per share adjusts the figures used in the Re-measurement of the net defined benefit liability, which determination of basic earnings per share to take into comprise actuarial gains and losses, are recognised account: immediately in other comprehensive income (OCI). The service and interest cost related to defined benefit plans are i. the after income tax effect of interest and other recognised in employee benefits in the statement of profit and financing costs associated with dilutive potential loss. When the benefits of a plan are improved, the portion equity shares, and of the increased benefit related to past service by employees is recognised in the Statement of Profit and Loss on a straight ii. the weighted average number of additional equity line basis over the average period until the benefits become shares that would have been outstanding assuming vested. The Company recognises gains and losses on the the conversion of all dilutive potential equity shares. curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. k) Borrowing costs Borrowing costs are interest and other costs related to i) Taxation borrowing that the Company incurs in connection with the Income-tax expense comprise current tax (i.e. amount of tax borrowing of funds and is measured with reference to the for the period determined in accordance with the income-tax effective interest rate applicable to the respective borrowing. law) and deferred tax charge or credit (reflecting the tax effects Borrowing costs include interest costs measured at Effective of timing differences between accounting income and taxable Interest Rate (EIR) and exchange differences arising from income for the period). It is recognised in statement of profit foreign currency borrowings to the extent they are regarded and loss except to the extent that it relates to items recognised as an adjustment to the interest cost. Ancillary borrowing costs directly in equity or in OCI. are amortised over the tenure of the loan.
Current tax Borrowing costs that are attributable to acquisition or Current tax is measured at that amount expected to be paid construction of qualifying assets are capitalized as a part to (recovered from) the taxation authorities, on the taxable of cost of such assets till the time the asset is ready for its income or loss determined in accordance with Income Tax intended use. A qualifying assets is the one that necessarily Act, 1961 and includes any adjustment to the tax payable or takes substantial period of time to get ready for intended use. receivable in respect of previous years. Other borrowing costs are recorded as an expense in the year in which they are incurred. Ancillary borrowing costs are Deferred tax amortised over the tenure of the loan. Deferred tax is provided, on all temporary differences at the reporting date between the tax bases of assets and liabilities l) P rovisions, Contingent liabilities and Contingent and their carrying amounts for financial reporting purposes. assets Deferred tax assets and liabilities are measured at the tax rates Provisions are recognized when the Company recognizes that that are expected to be applied to the temporary differences it has a present obligation as a result of past events, it is more when they reverse, based on the laws that have been enacted likely than not that an outflow of resources will be required or substantively enacted at the reporting date. Tax relating to to settle the obligation and the amount can be reasonably items recognised directly in equity or OCI is recognised in estimated. Provisions are measured at the present value of equity or OCI and not in the Statement of Profit and Loss. A managements best estimate of the expenditure required to deferred tax asset is recognized to the extent that it is probable settle the present obligation at the end of the reporting period. that future taxable profits will be available against which the The discount rate used to determine the present value is a temporary difference can be utilised. Deferred tax assets are pre-tax rate that reflects current market assessments of the reviewed at each reporting date and are reduced to the extent time value of money and the risks specific to the liability. The that it is no longer probable that future taxable profits will be increase in the provision due to passage of time is recognised available. as interest expense. 78 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 79
Notes to the Financial Statements for the year ended 31 March 2018
Provision in respect of loss contingencies relating to claims, The Executive Director and Chief Executive Officer assesses litigation, assessment, fines, penalties, etc. are recognised the financial performance and position of the Company, and when it is probable that a liability has been incurred and the makes strategic decisions. He is identified as being the chief amount can be estimated reliably operating decision maker for the Company. The Company has only one business segment, which is trading in garments A disclosure for a contingent liability is made when there is and company generates revenue majorly from Domestic a possible obligation or a present obligation that may, but sales along with some export sales. Accordingly, the amounts probably will not, require an outflow of resources. When there appearing in these financial statements relate to this one is a possible obligation or a present obligation in respect of business segment. which the likelihood of outflow of resources is remote, no provision or disclosure is made. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment assets Provisions are reviewed at each balance sheet date and include all operating assets used by the business segment and adjusted to reflect the current best estimate. If it is no longer consist principally of fixed assets, trade receivables and inventories. probable that an outflow of resources would be required to Segment liabilities include operating liabilities pertaining to the settle the obligation, the provision is reversed. segment.
Contingent assets are not recognized in financial statements. Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable m) Cash and Cash equivalents to each segment as also the amount allocable on a reasonable Cash and cash equivalents comprise cash-in-hand and basis. cash on deposits with banks and financial institutions. The Company considers all highly liquid investments with a Segment assets and liabilities that cannot be allocated remaining maturity at the date of purchase of three months or between the segments are shown as part of unallocated assets less and that are readily convertible to known amount of cash and liabilities respectively. Income and expenses relating to to be cash equivalents the enterprise as a whole and not allocable on a reasonable basis to business segment are reflected as unallocated income n) Segment reporting and expense Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. 80 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 81
Notes to the Financial Statements as at 31 March 2018
Note 3 - Property, plant and equipment
(` In Lakh) GROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK Balance as Additions Disposals Balance as Balance as Charge for Disposal of Balance as Balance as Balance as Particulars at 1 April at 31 March at 1 April the year assets at 31 March at 31 March at 31 March 2017 2018 2017 2018 2018 2017 Buildings - 158.35 - 158.35 - 1.26 - 1.26 157.09 - Leasehold improvements 1,407.32 106.79 45.36 1,468.75 158.08 164.72 20.12 302.68 1,166.07 1,249.24 Computers and accessories 46.93 6.00 0.34 52.59 25.64 16.89 0.34 42.19 10.40 21.29 Office equipments 93.86 28.46 2.82 119.50 25.46 28.76 2.45 51.77 67.73 68.40 Air conditoners 24.85 6.29 - 31.14 6.56 7.07 - 13.63 17.51 18.29 Furniture and fixtures 1,197.55 207.85 20.74 1,384.66 112.16 134.98 8.40 238.74 1,145.92 1,085.39 TOTAL 2,770.51 513.74 69.26 3,214.99 327.90 353.68 31.31 650.27 2,564.72 2,442.61 Capital Work-in-Progress 4.06 3.26 6.56 0.76 - - 0.76 4.06 TOTAL 4.06 3.26 6.56 0.76 - - - - 0.76 4.06
(` In Lakh) GROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK Balance as Additions Disposals Balance as Balance as Charge for Disposal of Balance as Balance as Balance as Particulars at 1 April at 31 March at 1 April the year assets at 31 March at 31 March at 31 March 2016 2017 2016 2017 2017 2016 Leasehold improvements 1,338.81 68.51 - 1,407.32 - 158.08 - 158.08 1,249.24 1,338.81 Computers and accessories 44.36 2.57 - 46.93 - 25.64 - 25.64 21.29 44.36 Office equipments 84.04 9.82 - 93.86 - 25.46 - 25.46 68.40 84.04 Air conditoners 24.44 0.41 - 24.85 - 6.56 - 6.56 18.29 24.44 Furniture and fixtures 929.40 268.15 - 1,197.55 - 112.16 - 112.16 1,085.39 929.40 TOTAL 2,421.05 349.46 - 2,770.51 - 327.90 - 327.90 2,442.61 2,421.05 Capital Work-in-Progress - 4.06 4.06 - - - 4.06 - TOTAL - 4.06 - 4.06 - - - - 4.06 - Note: As at 31 March 2018, Property, Plant and Equipment with carrying amount of ` Nil (31 March 2017: ` 2,442.61 Lakh) are subject to pari passu charge to secure bank loan (Refer Note: 15)
Note 4- Intangible Assets (` In Lakh) GROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK Balance as Additions Disposals Balance as Balance as Charge for Disposal of Balance as Balance as Balance as Particulars at 1 April at 31 March at 1 April the year assets at 31 March at 31 March at 31 March 2017 2018 2017 2018 2018 2017 Computer Software 55.57 10.20 - 65.77 12.12 13.68 - 25.80 39.97 43.45 TOTAL 55.57 10.20 - 65.77 12.12 13.68 - 25.80 39.97 43.45
GROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK Balance Additions Disposals Balance Balance Charge for Eliminated Balance Balance Balance Particulars as at as at as at the year on disposal as at as at as at 1 April 31st March 1 April of assets 31st March 31st March 1 April 2016 2017 2016 2017 2017 2016 Computer Software 46.80 8.77 - 55.57 - 12.12 - 12.12 43.45 46.80 TOTAL 46.80 8.77 - 55.57 - 12.12 - 12.12 43.45 46.80 80 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 81
Notes to the Financial Statements as at 31 March 2018
Note 5 Non-current loans (Unsecured, considered good) (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016
Security Deposits 145.55 190.48 222.93 145.55 190.48 222.93
Note 6 Other non-current assets (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Capital advances 100.18 65.00 65.00 Advances other than capital advances : Deposit with statutory authorities 8.31 14.77 1.57 Prepaid Expenses 20.71 28.85 26.49 129.20 108.62 93.06
Note 7 Inventories (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Traded goods - Garments 5,259.68 5,936.06 5,552.05 - Accessories 225.00 195.92 126.20 5,484.68 6,131.98 5,678.25 Note: During the year ended 31 March 2018 the Company recorded inventory write down by ` 82.13 Lakh. These adjustments were included in Changes in inventories of stock-in-trade and Purchase of stock-in-trade.
Note 8 Trade receivables (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Unsecured, Considered good 1,991.64 1,371.10 1,962.25 1,991.64 1,371.10 1,962.25
Note 9 Cash and cash equivalents (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Balance with banks : In current account 21.69 38.19 9.21 In deposits with original maturity of less than 3 months 114.49 - - Cash on hand 8.83 7.39 9.24 145.01 45.58 18.45 82 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 83
Notes to the Financial Statements as at 31 March 2018
Note 10 Current loans (Unsecured, considered good) (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Security Deposits - Deposit to mall management 620.35 495.31 318.18 - Deposit for rental premises (refer note 36) 909.57 906.67 888.55 - Deposit for electricty & telephone 1.35 1.30 1.31 1,531.27 1,403.28 1,208.04
Note 11 Other current financial assets (Unsecured, considered good) (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Insurance claim receivable 0.84 15.97 15.34 Duty drawback receivable 34.91 73.07 34.03 Loans to employees 3.13 5.36 - Receivable from directors 26.13 - - Interest accrued on deposits 0.02 0.02 - 65.03 94.42 49.37
Note 12 Other current assets (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Advance other than Capital advances Prepaid expenses 49.56 30.00 32.03 Export Benefits receivable 130.64 - - With Government Authorities (VAT / Cenvat / Service tax credit receivable) 147.28 6.79 - Advance to Vendors 28.44 33.01 77.64 355.92 69.80 109.67
Note 13 Share Capital (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 a. Authorised : 30,000,000 (Previous year: 30,000,000) Equity shares of ` 10 each 3,000.00 3,000.00 3,000.00 TOTAL 3,000.00 3,000.00 3,000.00 b. Issued, Subscribed and Paid up: 22,082,609 (Previous year 22,082,609; 1 April 2016 : 50,000) Equity shares fully 2,208.26 2,208.26 5.00 paid up TOTAL 2,208.26 2,208.26 5.00 c. Reconciliation of number of shares outstanding at the beginning and end of the year : Number of Equity shares : Outstanding at the beginning of the year 2,20,82,609 50,000 - Equity Shares cancelled during the year - (50,000) - Equity shares issued during the year (refer note d(2) below) - 2,20,82,609 - Outstanding at the end of the year 2,20,82,609 2,20,82,609 50,000 82 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 83
Notes to the Financial Statements as at 31 March 2018
d. Terms / Rights attached to equity shares and note on shares issued 1. Terms / Rights attached to Equity shares The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held. 2. Issue of Shares Pursuant to the scheme of arrangement (‘the Scheme’) between Mandhana Industries Limited (MIL) with the Company under Sections 391 to 394 of the Companies Act, 1956 (or re-enactment thereof upon effectiveness of the Companies Act, 2013) as sanctioned by Honourable High Court of Judicature of Bombay vide its Order dated 29 March 2016, which has been adopted by the Board of Directors of the Company on 22 November 2014 and filed with the Registrar of Companies on 31 March 2016 to make the scheme effective, the entire retail business and all assets and liabilities of MIL were transferred and vested in the Company effective from the appointed date, i.e. 1 April 2014. Accordingly the Scheme has been given effect to in the financial statements for the year ended 31 March 2016. In consideration of the transfer of the business as a going concern, the Company has issued 2 fully paid up equity shares of `10 each for every 3 fully paid up equity shares of `10 each of the Transferor Company to the equity shareholders of the Transferor Company. Accordingly, 22,082,609 equity shares of the Company of ` 10 each fully paid up are issued to the shareholders of the Transferor Company. The initial share capital of 50,000 equity share of ` 10 each issued by the Company stands canceled.
e. Shareholders holding more than 5% of the equity share capital: As at As at As at Particulars 31 March 2018 31 March 2017 1 April 2016 No. of Shares % holding No. of Shares % holding No. of Shares % holding Purshottam Mandhana - - 13,33,333 6.04% 8,316 16.63% Manish Mandhana 11,48,206 5.20% 13,86,206 6.28% 6,238 12.48% Priyavrat Mandhana 11,19,894 5.07% 11,19,894 5.07% 8,368 16.74% Rakesh Jhunjhunwala 28,13,274 12.74% 28,13,274 12.74% - - Biharilal Mandhana - - - - 6,238 12.48% Prema Mandhana - - - - 8,316 16.63% Sudha Mandhana - - - - 6,237 12.47% Sangeeta Mandhana - - - - 6,287 12.57% Total 50,81,374 23.01% 66,52,707 30.13% 50,000 100.00% Note: No shares have been allotted without payment being received in cash or by way of bonus shares during the period of five years immediately preceding the Balance Sheet date.
Note 14 Other equity Reserves and Surplus (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 i) Capital reserve At the commencement of the year 5.00 2,208.26 2,208.26 Add : Share cancelled pursuant to demerger - 5.00 - Less : On issue of equity share capital - (2,208.26) - At the end of the year 5.00 5.00 2,208.26 ii) Retained Earnings At the commencement of the year 3,615.68 2,208.43 66.89 Add: Profit/ (loss) for the year 902.72 1,397.98 2,141.54 Add: Gain/ (loss) on remeasurement of defined benefit plans 10.38 9.27 - At the end of the year 4,528.78 3,615.68 2,208.43 4,533.78 3,620.68 4,416.69 Nature of reserves a) Capital reserve - The capital reserve has been created on giving effect to the demerger of Mandhana Retail Ventures Limited from Mandhana Industries limited from the appointed date of 1st April 2014. Refer to note 37 for details of the demerger. 84 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 85
Notes to the Financial Statements as at 31 March 2018
Note 15 Non-current borrowings (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Secured Term loans from Banks - - 212.56 - - 212.56
Terms of Loan: i) The term loan from one of the banks carries an interest rate of 12.15% P.A. and is repayable in 20 quarterly installments commencing from 26 June 2014. ii) Aforesaid term loan is secured by way of paripassu charge over all the property, plant and equipment procured including hypothecation of movable properties . iii) Current maturity of term loan as on 31 March 2017 of ` 212.56 Lakh (Previous year ` 1,250 Lakh) is disclosed under ‘Other current financial liabilities’. (Refer Note 21)
Note 16 Other non-current financial liabilities (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Deposits from franchisee 103.54 274.58 252.54 103.54 274.58 252.54
Note 17 Non-current provisions (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Gratuity [Refer note 35] 59.16 53.69 - 59.16 53.69 -
Note 18 Other non-current liabilities (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Income received in advance 8.06 18.24 41.44 8.06 18.24 41.44
Note 19 Current Borrowings (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Secured - Cash credit facility from bank 750.46 591.20 - Unsecured Loans from related parties - Directors - - 22.50 - Mandhana Industries Limited - - 507.18 750.46 591.20 529.68 84 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 85
Notes to the Financial Statements as at 31 March 2018
Terms of loan: i) Cash credit facility taken from a bank is secured by hypothecation by way of first and exclusive charges on all present and future current financial and non-financial assets inclusive of all inventories and book debts, carries an interest based on prevalent MCLR plus margin and the same is repayable on demand.
ii) Loans from related parties are interest free loans and repayable on demand.
Note 20 Trade payables (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Due to: - Due to micro, small and medium enterprises (refer note 38) 319.70 826.98 - - Due to others 4,037.89 3,293.41 2,967.74 4,357.59 4,120.39 2,967.74
Note 21 Other current financial liabilities (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Current maturities of long-term debt (including interest accrued and due) - 216.95 1,265.63 (Refer note 15) Deposits received -Deposit from franchise 327.51 92.33 69.02 -Deposit from distributors 146.60 206.80 250.00 -Deposit from Shop in Shop 330.50 254.80 247.48 -Deposit from e-commerce 5.00 Payable towards capital expenditure 43.25 17.13 - Employee benefits payable 212.96 125.15 162.73 1,065.82 913.16 1,994.86
Note 22 Other current liabilities (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Statutory Dues Payables* (includes tax deducted at source, value added tax, central sales 60.52 112.57 149.63 tax, goods and service tax, provident fund, profession tax and ESIC) Income received in advance 23.36 35.74 32.84 Advances from customers 99.94 - - 183.82 148.31 182.47
* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.
Note 23 Current provisions (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Provision for employee benefits Gratuity [Refer note 35] 11.85 0.83 - 11.85 0.83 - 86 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 87
Notes to the Financial Statements as at 31 March 2018
Note 24 Liabilities for current tax (net) (` In Lakh) As at As at As at 31 March 2018 31 March 2017 1 April 2016 Provision for taxation (Net off advance tax of ` 1,357.19 Lakh (31 March 2017: 150.92 1,361.38 2,237.62 2,408.09 Lakh; 1 April 2016: Nil )) 150.92 1,361.38 2,237.62
Note 25 Revenue from Operations (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 A. Sales of products Traded goods Domestic sales 22,517.58 22,537.12 Export sales 3,185.55 3,209.47 25,703.13 25,746.59 B. Other operating revenue Export benefits and other incentives 241.80 212.21 241.80 212.21 25,944.93 25,958.80
Note 26 Other Income (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 Income an financial assets carried at amortised cost. Interest on deposits with banks 0.16 10.74 Net gain on foreign currency transactions 56.44 31.82 Interest income on security deposits carried at fair value 72.18 134.82 128.78 177.38
Note 27 Purchase of stock-in-trade (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 - Garments & Accessories 10,434.30 10,836.41 10,434.30 10,836.41 86 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 87
Notes to the Financial Statements for the year ended 31 March 2018
Note 28 Changes in inventories of stock in trade (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 Opening Stock : - Garments 5,936.06 5,552.05 - Accessories 195.92 126.20 Less: Closing Stock: - Garments 5,259.68 5,936.06 - Accessories 225.00 195.92 Changes in inventories: - Garments 676.38 (384.01) - Accessories (29.08) (69.72) 647.30 (453.73)
Note 29 Employee benefit expense (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 Salaries, wages and bonus 2,263.79 1,847.29 Contribution to provident and other funds 156.95 123.17 Gratuity expense 33.19 25.03 Staff welfare expenses 35.12 20.31 2,489.05 2,015.80
Note 30 Finance costs (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 Interest on Borrowings - on term loan 5.82 122.63 - on cash credit 55.14 3.53 - on current loans - 6.47 Interest under MSMED Act, 2006 56.32 47.64 Interest on discounting of deposits at amortised cost 59.96 59.83 177.24 240.10 88 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 89
Notes to the Financial Statements for the year ended 31 March 2018
Note 31 Other expenses (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 Commission Expenses 5,445.34 5,563.17 Travelling and conveyance 174.20 140.55 Directors sitting fees 18.53 16.39 Advertisement & sales promotion expenses 800.34 767.51 Auditor remuneration 22.05 13.83 Bank charges 59.62 68.23 Communication expenses 25.15 31.47 Electricity charges 93.82 91.79 Freight & transportation charges 145.76 192.96 General expenses 49.60 23.25 Housekeeping charges 26.16 14.64 Insurance charges 8.92 8.09 Interest on income tax 8.64 268.17 Legal charges 27.03 27.45 Loss on sale of fixed assets 27.83 - License fees 1,105.42 1,188.73 Printing & stationery 15.06 8.57 Professional fees 244.39 312.00 Rates & taxes 26.64 85.73 Rent, CAM & utility charges 1,933.11 1,974.26 Repairs & maintenance 52.51 30.34 Shortage / excess 41.41 2.26 Subscription & membership fees 20.70 7.70 Watch & ward expenses 35.09 38.35 10,407.32 10,875.44
Note 32 - Tax Expense (a) Amounts recognised in profit and loss (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 Current income tax 181.00 1,240.00 Tax expense for prior years 87.34 - Deferred income tax liability / (asset), net Disclosures basis the MAT credits - since MAT has been adjusted to all the below items: - Unabsorbed tax loss (493.04) - - Unabsorbed depreciation (103.66) - - Property, plant and equipment (33.18) (17.26) - Inventories (695.54) 177.54 - Deferred income 1,927.43 (492.86) - Provision for gratuity (11.21) (23.77) - Other items (29.72) 0.51 MAT credit entitlement (181.00) - Deferred tax expense 380.08 (355.84) Tax expense for the year 648.42 884.16 88 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 89
Notes to the Financial Statements for the year ended 31 March 2018
Note 32 - Tax Expense (Contd.) (b) Amounts recognised in other comprehensive income (` In Lakh) For the year ended March 31, 2018 For the year ended March 31, 2017 Before tax Tax Net of tax Before tax Tax Net of tax (expense) (expense) benefit benefit Items that will not be reclassified to profit or loss Remeasurements of the defined benefit plans 15.88 (5.50) 10.38 14.17 (4.90) 9.27 15.88 (5.50) 10.38 14.17 (4.90) 9.27 (c) Reconciliation of effective tax rate (` In Lakh) For the year For the year ended ended 31 March 2018 31 March 2017 Profit before tax 1,551.14 2,282.14 Tax using the Company’s domestic tax rate (Current year 34.61% and Previous Year 34.61%) (536.82) (789.80) Reduction in tax rate Tax effect of: Non-deductible tax expenses (24.68) (109.30) Adjustment of tax of earlier years (87.34) - Others 0.42 14.94 (648.42) (884.16)
The Company’s weighted average tax rates for the years ended March 31, 2018 and 2017 were 36.17% and 38.74%, respectively. Income tax expense was `648.42 Lakh for the year ended 31 March 2018, as compared to income tax expense of ` 884.16 Lakh for the year ended 31 March 2017.
(d) Movement in deferred tax balances (` In Lakh) Net Recognised Recognised Net Deferred Deferred balance in profit or in OCI balance tax asset tax liability 31 March 2018 1 April, loss 31 March 2017 2018 Deferred tax asset Unabsorbed tax loss - 493.04 - 493.04 493.04 - Unabsorbed depreciation - 103.66 - 103.66 103.66 - Property, plant and equipment (19.66) 33.18 - 13.52 13.52 - Inventories (758.50) 695.54 - (62.96) - (62.96) Deferred income 2,101.35 (1,927.43) - 173.92 173.92 - Provision for gratuity 18.87 11.21 (5.50) 24.58 24.58 - Other items (0.63) 29.72 - 29.09 29.09 - MAT credit entitlement - 181.00 - 181.00 181.00 - Tax assets (liabilities) 1,341.43 (380.08) (5.50) 955.85 1,018.81 (62.96) Set off tax ------Net tax assets 1,341.43 (380.08) (5.50) 955.85 1,018.81 (62.96) 90 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 91
Notes to the Financial Statements for the year ended 31 March 2018
Note 32 - Tax Expense (Contd.) (` In Lakh) Net balance Recognised Recognised Net balance Deferred tax Deferred tax 31 March 2017 1 April, in profit or in OCI 31 March asset liability 2016 loss 2017 Deferred tax asset Property, plant and equipment (36.92) 17.26 - (19.66) - (19.66) Inventories (580.96) (177.54) - (758.50) - (758.50) Deferred income 1,608.49 492.86 - 2,101.35 2,101.35 - Provision for gratuity - 23.77 (4.90) 18.87 18.87 - Other items (0.12) (0.51) - (0.63) - (0.63) Tax assets (liabilities) 990.49 355.84 (4.90) 1,341.43 2,120.22 (778.79) Set off tax ------Net tax assets 990.49 355.84 (4.90) 1,341.43 2,120.22 (778.79)
The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of future taxable income and the period over which deferred income tax assets will be recovered.
Tax losses carried forward (` In Lakh) 31 Mar 2018 31 Mar 2017 Expiry date 1 April 2016 Expire 1,424.64 - 31.03.2026 - Never Expire 299.52 - - -
Note 33 Earnings per share (EPS) Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares. i. Profit attributable to Equity holders of the Company
31 March 2018 31 March 2017 (` In Lakh) (` In Lakh) Profit attributable to equity holders of the Company (for basic EPS) 902.72 1,397.98 Effect of dilution - - Profit attributable to equity holders of the Company adjusted for the effect of dilution 902.72 1,397.98 ii. Weighted average number of ordinary shares 31 March 2018 31 March 2017 (` In Lakh) (` In Lakh) Issued ordinary shares at April 1 2,20,82,609 50,000 Effect of shares issued to related business combinations - 2,20,82,609 Effect of shares cancelled during the year - (50,000) Weighted average number of shares at March 31 for basic EPS 2,20,82,609 2,20,82,609 Effect of dilution Weighted average number of shares at March 31 for diluted EPS 2,20,82,609 2,20,82,609 90 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 91
Notes to the Financial Statements for the year ended 31 March 2018
Basic and Diluted earnings per share 31 March 2018 31 March 2017 ` ` Basic earnings per share 4.09 6.33 Diluted earnings per share 4.09 6.33
Note 34 Financial instruments - Fair values and risk management A. Accounting classification and fair values The following table shows the carrying amount and fair values of financial assets and liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilties not measured at fair value if the carrying amount is a reasonable approximation of its fair value.
(` In Lakh) Carrying amount Fair value 31 March 2018 FVTPL FVTOCI Amortised Total Level 1 Level 2 Level 3 Total Cost Financial assets Security Deposits given for Brand outlets - - 765.90 765.90 - - - - Trade receivables - - 1,991.64 1,991.64 - - - - Cash and cash equivalents - - 145.01 145.01 - - - - Current Loans - - 910.92 910.92 - - - - Other Current financial asset - - 65.03 65.03 ------3,878.50 3,878.50 - - - - Financial liabilities Term loan from banks ------Franchisee deposits - - 431.05 431.05 - - - - Current borrowings - - 750.46 750.46 - - - - Trade and other payables - - 4,357.59 4,357.59 - - - - Other Current financial liabilities - - 738.31 738.31 ------6,277.41 6,277.41 - - - -
(` In Lakh) Carrying amount Fair value 31 March 2017 FVTPL FVTOCI Amortised Total Level 1 Level 2 Level 3 Total Cost Financial assets Security Deposits given for Brand outlets - 685.79 685.79 - - - - Trade receivables - - 1,371.10 1,371.10 - - - - Cash and cash equivalents - - 45.58 45.58 - - - - Current Loans - - 907.97 907.97 - - - - Other Current financial asset - - 94.42 94.42 ------3,104.86 3,104.86 - - - - Financial liabilities Term loan from banks - - 216.95 216.95 - - - - Franchisee deposits - - 366.91 366.91 - - - - Current borrowings - - 591.20 591.20 - - - - Trade and other payables - - 4,120.39 4,120.39 - - - - Other Current financial liabilities - - 603.88 603.88 ------5,899.33 5,899.33 - - - - 92 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 93
Notes to the Financial Statements for the year ended 31 March 2018
Note 34 Financial instruments - Fair values and risk management (Contd.) A. Accounting classification and fair values (Contd.)
(` In Lakh) Carrying amount Fair value 1 April 2016 FVTPL FVTOCI Amortised Total Level 1 Level 2 Level 3 Total Cost Financial assets Security Deposits given for Brand outlets - - 541.11 541.11 - - - - Trade receivables - - 1,962.25 1,962.25 - - - - Cash and cash equivalents - - 18.45 18.45 - - - - Current Loans - - 889.86 889.86 - - - - Other Current financial asset - - 49.37 49.37 ------3,461.04 3,461.04 - - - - Financial liabilities Term loan from banks - - 1,478.19 1,478.19 - - - - Franchisee deposits - - 321.56 321.56 - - - - Current borrowings - - 529.68 529.68 - - - - Trade and other payables - - 2,967.74 2,967.74 - - - - Other Current financial liabilities - - 660.21 660.21 ------5,957.38 5,957.38 - - - -
(1) Assets that are not financial assets (such as receivables from statutory authorities, export benefit receivables, prepaid expenses, advances paid and certain other receivables) amounting to `485.12, `178.42 Lakh and `202.73 Lakh as of 31 March 2018, 31 March 2017 and 1 April 2016, respectively, are not included.
(2) Other liabilities that are not financial liabilities (such as statutory dues payable, deferred revenue, advances from customers and certain other accruals) amounting to `191.88, `166.55 Lakh and `223.91 Lakh as of 31 March 2018, 31 March 2017 and 1 April 2016, respectively, are not included.
B. Measurement of fair values The following tables show the valuation techniques used in measuring Level 2 fair values, as well as the significant unobservable inputs used.
Financial instruments measured at fair value Inter-relationship between significant Type Valuation technique Significant unobservable inputs unobservable inputs and fair value measurement Items measured at ammortised Discounted cash flow Not applicable Not applicable cost such as security deposits approach: The valuation given and security deposits taken model considers the present value of expected payment, discounted using a risk adjusted discount rate.
C. Financial risk management The Company has exposure to the following risks arising from financial instruments:
Credit risk ; Liquidity risk ; and Market risk i. Risk management framework The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Company’s risk management policies. The committee reports regularly to the board of directors on its activities 92 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 93
Notes to the Financial Statements for the year ended 31 March 2018
Note 34 Financial instruments - Fair values and risk management (Contd.) The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The audit committee oversees how management monitors compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
ii. Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.
The carrying amount of following financial assets represents the maximum credit exposure:
Trade and other receivables The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Risk Management Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Risk Management Committee.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the Company may have a secured claim. The Company does not otherwise require collateral in respect of trade and other receivables
Impairment At 31 March 2018, the ageing of trade and other receivables that were not impaired was as follows. Carrying amount (` In Lakh) 31-Mar-18 31-Mar-17 31-Mar-16 Neither past due nor impaired 1,045.36 377.03 359.71 Past due 1–30 days 331.15 380.90 389.03 Past due 31–90 days 410.04 339.53 635.25 Past due 91–150 days 82.07 62.80 132.19 More than 150 days 123.03 210.84 446.08 1,991.64 1,371.10 1,962.25
Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk, including underlying customers’ credit ratings if they are available.
At 31 March 2018, the carrying amount of the Company’s most significant single customer, was ` 417.26 Lakh (31 March 2017 : ` 314.83 Lakh; 1 April 2016: ` 167.49 Lakh).
Cash and cash equivalents The Company held cash and cash equivalents of `145.01 at 31 March 2018 (31 March 2017: ` 45.58 Lakh; 1 April 2016: ` 18.45 Lakh). The cash and cash equivalents are held with bank and financial institution counterparties, which have good credit ratings 94 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 95
Notes to the Financial Statements for the year ended 31 March 2018
Note 34 Financial instruments - Fair values and risk management (Contd.) C. Financial risk management (Contd.)
Security deposits given to lessors The Company has given security deposit to lessors of `1,675.47 Lakh as at 31 March 2018 (31 March 2017: `1,592.47 Lakh; 1 April 2016: ` 1,429.65 Lakh) for premises leased to the Company. The credit worthiness of such lessors is considered to be good. iii. Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
The company has obtained fund and non fund based working capital requirments from HDFC Bank.
Exposure to liquidity risk The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments: (` In Lakh) Contractual cash flows 31 March 2018 Carrying Total 0-12 1-2 years 2-5 years More than 5 amount months years Non-derivative financial liabilities Term loans from banks ------Deposits received 431.05 431.05 327.51 72.84 30.70 - Current borrowings 750.46 750.46 750.46 - - - Trade and other payables 4,357.59 4,357.59 4,357.59 - - - Other current financial liabilities 738.31 738.31 738.31 - - -
Contractual cash flows 31 March 2017 Carrying Total 0-12 1-2 years 2-5 years More than 5 amount months years Non-derivative financial liabilities Term loans from banks (including interest) 216.95 216.95 216.95 - - - Deposits received 366.91 366.91 92.33 227.99 46.59 - Current borrowings 591.20 591.20 591.20 - - - Trade and other payables 4,120.39 4,120.39 4,120.39 - - - Other current financial liabilities 603.88 603.88 603.88 - - -
Contractual cash flows 1 April 2016 Carrying Total 0-12 1-2 years 2-5 years More than 5 amount months years Non-derivative financial liabilities Term loans from banks (including interest) 1,478.19 1,478.19 1,265.63 212.56 - - Deposits received 321.56 321.56 69.02 49.60 202.94 - Current borrowings ------Loans from related parties 529.68 529.68 529.68 - - - Trade and other payables 2,967.74 2,967.74 2,967.74 - - - Other current financial liabilities 660.21 660.21 660.21 - - - iv. Market risk Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and equity prices – will affect the Company’s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk and interest rate risk. Thus, our exposure to market risk is a function of borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in foreign currency revenues and costs. 94 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 95
Notes to the Financial Statements for the year ended 31 March 2018
Note 34 Financial instruments - Fair values and risk management (Contd.) C. Financial risk management (Contd.)
Currency risk The Company is exposed to currency risk on account of its trade receivables and payables in foreign currency. The functional currency of the Company is Indian Rupee. The Company does not use any forward exchange contracts to hedge its currency risk.
Exposure to currency risk The currency profile of financial assets and financial liabilities in Indian Rupee terms as at 31 March 2018, 31 March 2017 and 1 April 2016 are as below:
(` In Lakh) 31 March 2018 USD EURO Financial assets Trade and other receivables 428.42 75.87 Financial liabilities Trade and other payables 228.74 - Net Exposure 199.68 75.87
(` In Lakh) 31 March 2017 USD EURO Financial assets Trade and other receivables 333.87 128.37 Financial liabilities Trade and other payables 242.59 - Net Exposure 91.28 128.37
(` In Lakh) 1 April 2016 USD EURO Financial assets Trade and other receivables 250.10 224.17 Financial liabilities Trade and other payables 205.91 - Net Exposure 44.19 224.17
Sensitivity analysis A reasonably possible strengthening (weakening) of the Indian Rupee against US Dollar/Euro at March 31 would have affected the measurement of financial instruments denominated in these currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
Profit or loss Effect in ` Strengthening Weakening 31March 2018 1% movement USD 2.00 (2.00) EURO 0.76 (0.76) 2.76 (2.76)
Profit or loss Effect in ` Strengthening Weakening 31 March 2017 1% movement USD 0.91 (0.91) EURO 1.28 (1.28) 2.20 (2.20) 96 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 97
Notes to the Financial Statements for the year ended 31 March 2018
Interest rate risk Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates. Exposure to interest rate risk Company’s interest rate risk arises mainly from borrowings made. Borrowing made at fixed rates exposes the Company to fair value interest rate risk whereas borrowing at variable rate exposes the company to cash flow interest rate risk. The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows. (` in Lakh) 31 March 2018 31 March 2017 1 April 2016 Fixed-rate instruments Financial assets 765.90 685.79 541.11 Financial liabilities (431.05) (583.86) (1,799.75) 334.85 101.93 (1,258.64) Variable-rate instruments Financial assets - - - Financial liabilities (750.46) (591.20) - (750.46) (591.20) - Total (415.61) (489.27) (1,258.64) Fair value sensitivity analysis for fixed-rate instruments The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss. Cash flow sensitivity analysis for variable-rate instruments A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant. Profit or loss ` 100 bp increase 100 bp decrease 31 March 2018 Variable-rate instruments (7.50) 7.50 Cash flow sensitivity (net) (7.50) 7.50 31 March 2017 Variable-rate instruments (5.91) 5.91 Cash flow sensitivity (net) (5.91) 5.91
Capital Disclosure Equity share capital and other equity are considered for the purpose of Company’s capital management. The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders. The board of directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Company monitors capital using a ratio of ‘adjusted net debt’ to ‘adjusted equity’. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings less cash and cash equivalents. The Company’s policy is to keep the ratio below 1.00. The Company’s adjusted net debt to equity ratio at 31 March 2018 and 31 March 2017 was as follows:
(` In Lakh) 31 March 2018 31 March 2017 1 April 2016 Non-current borrowings - - 212.56 Current Borrowings 750.46 808.15 1,795.31 Gross Debt Less : Cash and cash equivalent 145.01 45.58 18.45 Adjusted net debt 605.45 762.57 1,989.42 Total equity 6,742.04 5,828.94 4,421.69 Adjusted net debt to adjusted equity ratio 0.09 0.13 0.45 96 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 97
Notes to the Financial Statements for the year ended 31 March 2018
Note 35 - Employee benefits (i) Defined Contribution Plans: The Company makes contributions, determined as a specific percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employees State Insurance, which is a defined contribution plan. The Company has no obligations other than to make the specified contibutions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund and Employees State Insurance for the year aggregated to ` 156.95 Lakh (31 March 2017: 123.16 Lakh; 1 April 2016: ` 73.53 Lakh)
The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
(ii) Defined Benefit Plan: A) The Company has a defined benefit gratuity plan. The plan provides for payment as under: i) On normal retirement / early retirement / withdrawal / resignation: As per the provisions of the Payment of Gratuity Act, 1972 with vesting period of 5 years of service.
ii) On death in service: As per the provisions of the Payment of Gratuity Act, 1972 without any vesting period.
Actuarial valuation of plan assets and the present valuation of the defined benefit obligation for gratuity are carried out on a yearly basis, the most recent valuation being carried out as on 31 March 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, are measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s financial statements as at balance sheet date:
(` In Lakh) 31-Mar-18 31-Mar-17 01-Apr-16 Present value of obligations as at year end 71.01 54.52 43.66 Fair value of plan assets as at year end - - - Net liability recognised as at year end 71.01 54.52 43.66 Out of which: Non-current 59.16 53.69 42.45 Current 11.85 0.83 1.21
B. Movement in net defined benefit (asset) liability The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit liability and its components: (` In Lakh) Defined benefit obligation 31-Mar-18 31-Mar-17 01-Apr-16 Opening balance 54.52 43.66 - Included in profit or loss - Current service cost 26.70 21.62 - Past service cost 1.67 - - Interest cost (income) 4.00 3.41 - 86.89 68.69 - Included in OCI Remeasurement loss (gain): Actuarial loss (gain) arising from: Demographic assumptions (2.53) - - Financial assumptions 0.30 4.06 - Experience adjustment (13.65) (18.24) - (15.88) (14.17) - Benefits paid - - - Closing balance 71.01 54.52 - 0.00 (0.00) 98 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 99
Notes to the Financial Statements for the year ended 31 March 2018
C. Defined benefit obligations i. Actuarial assumptions The following were the principal actuarial assumptions at the reporting date (expressed as weighted averages):
31-Mar-18 31-Mar-17 01-Apr-16 Discount rate 7.30% 7.40% - Salary escalation rate 5.10% 5.10% - Withdrawal rates 35% at younger 5% at younger ages reducing to ages reducing to 5% at older ages 1% at older ages Mortality rate Indian Assured Lives Mortality (2006-08) Table
Assumptions regarding future mortality have been based on published statistics and mortality tables. The current longevities underlying the values of the defined benefit obligation at the reporting date were as follows
Sample Rates of Indian Assured Lives Mortality:
Age (In years) Rate p.a. 20 0.09% 30 0.11% 40 0.18% 50 0.49% 60 1.15% ii. Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below. 31 March 2018 31 March 2017 Increase Decrease Increase Decrease Discount rate (0.5% movement) (1.46) 1.53 (3.85) 4.30 Future salary growth (0.5% movement) 1.52 (1.46) 4.35 (4.05)
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown. iii. Expected future cash flows
Less than a Between 1-2 Between 2-5 Over 5 Total year years years years 31March 2018 Defined benefit obligations (Gratuity) 11.84 10.70 44.87 25.96 93.38 Total 11.84 10.70 44.87 25.96 93.38 98 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 99
Notes to the Financial Statements for the year ended 31 March 2018
Less than a Between 1-2 Between 2-5 Over 5 Total year years years years 31 March 2017 Defined benefit obligations (Gratuity) 0.83 1.66 10.16 17.89 30.54 Total 0.83 1.66 10.16 17.89 30.54 Notes 1. Comparative numbers are not available for the year 2016 since 2017 is the first year when the Company’s management has undertaken an actuarial valuation. The opening defined benefit obligation indicates the amount of liability taken over from Mandhana Industries Limited (MIL) in the scheme of demerger.
2. The discount rate is based on the prevailing market yields on Indian Government securities as at the balance sheet date for the estimated term of the obligations.
3. The Company does not have a carry forward or an encashment policy for compensated absences and hence no liability has been accrued in the financial statements.
Note 36 - Related Party Disclosures A. List of related parties and relationships Key Management Personnel and their Relatives Relationship Shri Priyavrat Mandhana Director Smt. Sangeeta M. Mandhana Director Shri Sachin Jaju Director Shri Purushottam C. Mandhana Father of Shri Priyavrat Mandhana (Director upto 8 August 2016) Shri Biharilal C. Mandhana Father in Law of Smt. Sangeeta M. Mandhana (Director upto 8 August 2016) Shri Manish B. Mandhana Chief Executive Officer Smt. Sudha B. Mandhana Mother in Law of Smt. Sangeeta M. Mandhana Ms. Preeti P. Mandhana Sister of Shri Priyavrat Mandhana Smt. Prema P. Mandhana Mother of Shri Priyavrat Mandhana Smt. Priti P. Mandhana Wife of Shri Priyavrat Mandhana Mr. Virendra Varma Company Secretary Mr. Pradip Dubhashi Non-Executive and Independent Chairman Mr. Ramnath Pradeep Non-Executive and Independent Director Mr. Kiran Vaidya Non-Executive and Independent Director Mr. Hemant Gupta Chief Financial Officer & Chief Operating Officer Entities over which Key Management Mandhana Industries Limited personnel and their relatives are able Golden Seams Industries Pvt Ltd to exercise significant influence Mandhana WD Limited Mahan Synthetics Textiles Private Limited Balaji Corporation
There is no Related Party over which the Company exercises its control 100 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 101
Notes to the Financial Statements for the year ended 31 March 2018
Note 36 - Related Party Disclosures (Contd.)
B. Related party relationships, transactions and balances The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:
(` In Lakh) Transaction values Balances outstanding for the year ended 31 as at 31 March Particulars March 2018 2017 2018 2017 2016 Purchase of good and services Enities over which management personnel and their relatives exercise significant 126.22 626.53 - 177.23 470.55 influence Purchase of property, plant and equipment Enities over which management personnel and their relatives exercise significant 150.00 - - - - influence Repayment of loans taken Entities over which management and their relatives exercise significant influence - 507.18 - - 507.18 Key managerial personnel - 22.50 - - 22.50 Compensation paid to key Managerial personnel Salary 309.32 116.75 16.17 2.02 - Recoverable from Directors - - 26.13 - - Post employee gratuity and medical benefits 2.37 0.86 3.23 0.86 - Sitting Fees 18.53 16.39 - - - Deposit for rental premises Entities over which management and their relatives exercise significant influence - 18.13 906.67 906.67 888.55 Lease rent paid To Entities over which management and their relatives exercise significant influence 47.04 55.33 - 0.88 0.87 To Key managerial personnel 56.68 54.61 0.09 3.37 3.23 Recovery of expenses To Entities over which management and their relatives exercise significant influence 6.25 43.66 - - - Reimbursement of expenses To Entities over which management and their relatives exercise significant influence 51.43 332.23 - - -
Terms and conditions of transactions with related parties The sales to and purchases from related parties are made in the ordinary course of business on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2017: ` Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
Details of compensation to key managerial personnel has been provided in table above. The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.
Note 37 - Note on demerger Salient features of the scheme of demerger Mandhana Industries Limited (‘Transferor company’) is a public listed company incorporated under the Companies Act, 1956 on 25 July 1984. It is engaged in business of textile processes like calendering, sizing, dyeing, bleaching, shrinking finishing, mercerzing, texturing printing stamping and other textile processes of yarn, threads, woven / non woven fabrics, hosiery and aparels made from cotton, jute silk nylon wool and etc. It also had retail business for which it held exclusive license for manufacturing and merchandising of products under the brand “”Being Human””.
The demerger is intended to drive simplification by separating both Companies on to a such that the Company gets strategic flexibility to build a vibrant platform, enable a dedicated management focus and to accelarate growth of retail business and to have access to various sources of funds for rapid business growth. 100 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 101
Notes to the Financial Statements for the year ended 31 March 2018
The appointed date for the purpose of this scheme was 1 April 2014 and effective date was 1 April 2016.
In accordance with the approved scheme, the accounting for this demerger was done in accordance with the pooling of interest method as prescribed under the previous GAAP.
Accordingly, the Company accounted for the Scheme in its books of accounts with effect from the appointed date i.e. 1 April 2014 as under – (i) With effect from the appointed date, all the assets and liabilities appearing in the books of accounts of the Transferor Company were transferred to and vested in the Company and have been recorded in the financial statement of the Company at their respective book values. (ii) In consideration of the transfer of the business as a going concern, the Company has issued 2 fully paid up equity shares of `10 each for every 3 fully paid up equity shares of `10 each of the Transferor Company to the equity shareholders of the Transferor Company. (iii) Accordingly, 22,082,609 equity shares of the Company of ` 10 each fully paid up are issued to the shareholders of the Transferor Company. (iv) The initial share capital of 50,000 equity share of ` 10 each issued by the Company stands cancelled. Further, on 14 December 2016, the Company got its shares listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
(v) The value of assets and liabilities of the Transferor Company amalgamated with the Company is as under: (Below table is as per previous GAAP)
(` In Lakh) Particulars Amount Non-current assets Tangible fixed assets (including Capital work in progress) 1,833.23 Long-term loans and advances 1,308.28 Current Assets Inventories 1,741.89 Trade receivables 2,359.84 Cash and bank balances 282.17 Short-term loans and advances 234.42 Sub total 7,759.83 Non-current liabilities Long-term borrowings 3,212.56 Long-term provisions - Current Liabilities Short-term borrowings - Trade payables 628.03 Other current liabilities 1,710.98 Short-term provisions - Sub total 5,551.57 Total Net Assets as at 1 April 2014 2,208.26 Less: Reserves - General reserve - Surplus in statement of Profit and loss - Balance in share capital 2,208.26
(vi) The transactions of the business of MIL with effect from 1 April 2014 have been incorporated in the Company’s accounts on the basis of the audited Financial Statements of the business as at 31 March 2014, as audited by M/s. Vishal H Shah & Associates, Chartered Accountants, the statutory auditors of the Mandhana Industries Ltd.
(vii) The amount of share capital of the Transferor company is ` 2,208.26 Lakh as stated in note 3.e.iv above. The consideration for the demerger being the value of the new equity shares issued and allotted by the Company is ` 2,208 .26 Lakh as stated in note 3.e.iii above. There is no difference between the two, and hence no Goodwill or Capital Reserve has arisen on account of said demerger. 102 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 103
Notes to the Financial Statements for the year ended 31 March 2018
Note 38 - Dues to micro, small and medium enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from 2 October 2002, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with the Management, the following are the amounts due to Micro, Small and Medium enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006, as set out in the following disclosure:
(` In Lakh) Particulars 31-Mar-18 31-Mar-17 Principal amount remaining unpaid to any supplier at the year end 263.38 826.98 Interest due on the above mentioned principal amount remaining unpaid to any supplier at the year end 56.32 47.64 Amount of the interest paid by the Company in terms of Section 16 of the MSMED Act, 2006 along with the 56.32 47.64 amount of the payment made to the supplier beyond the appointed day Amount of interest due and payable for the period of delay in making payment but without adding the interest - - specified under the MSMED Act, 2006. Amount of interest accrued and remaining unpaid at the end of the accounting year - - Amount of further interest remaining due and payable even in the succeeding years, until such date when the - - interest dues as above are actually paid
Note 39 - Operating lease obligations The Company has entered in to non-cancelable operating lease. The tenure of such agreements ranges from thirty six month to one hundred eight months. There are no purchase option in these agreements. Lease agreements provide the option to Company to renew the lease period at the end of lease period. Future minimum lease payments under non-cancellable operating leases comprise:
(` In Lakh) Particulars 31-Mar-18 31-Mar-17 Not later than one year 1,394.93 1,481.44 Later than one year and not later than five year' 3,383.87 5,373.04 later than five year 1,131.12 685.08 Total 5,909.93 7,539.55 Operating lease rentals debited to Statement of Profit and Loss (net) 1,441.92 1,686.97 Operating lease capitalized to Property, Plant & Equipment NIL NIL
Note 40 - Details of payment to auditors
(` In Lakh) Particulars 31-Mar-18 31-Mar-17 Statutory audit fees* 19.00 14.08 Out of pocket expense 0.97 0.33 Total 19.97 14.41 Excludes Goods & Service tax /Service tax. 102 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 103
Notes to the Financial Statements for the year ended 31 March 2018
Note 41- Corporate Social Responsibility The Company has spent `4.60 Lakh (previous year : Nil) towards various schemes of Corporate Social Responsibility as prescribed under section 135 of the Companies Act, 2013. The details are as under: a) Gross amount required to be spent by the Company during the year is ` 63.99 Lakh (31 March 2017: `Nil ) b) Amount spent during the year on:
(` In Lakh) 31-Mar-18 31-Mar-17 In Cash Yet to be Total In Cash Yet to be Total Particulars paid in paid in Cash Cash Education & Food for the children from economically backward 4.60 59.39 63.99 - 42.62 42.62 families
The CSR Committee (the ‘Committee’) of the Company was constituted by the Board of Directors (the ‘Board’) at their meeting held on 7 Oct 2016. The Committee has finalised a CSR policy; The Company is dedicated towards its social responsibility and aims to contribute to society by supporting and enabling the social and economic development of local communities in India. In alignment with our vision and guiding principles, through our CSR initiatives we aim to address India’s most pressing challenges related to education and health. The CSR Policy of the Company sets out the Company’s commitment and approach towards Corporate Social Responsibility of improving the quality of life of the communities it serves. Our philosophy is interwoven in all the three thrust areas, i.e. Education, Employability and Entrepreneurship – the Company endeavours to enhance employability of youth and women.The initial CSR focus is driven by two broad themes, i.e. Educational initiatives for underprivileged, Employability / skill development (for underprivileged youth), for economic progress and social commitment. This has been recommended to the Board.
Note 42- Contingent liabilitites and commitments
i) The Company does not have any contingent liability (31 March,2017: NIL; 1 April 2016: NIL) which it has not disclosed for in the books of accounts.
ii) The estimated amount of contracts remaining to be executed on capital account to the extent not provided for is `40.01 Lakh (31 March 2017: ` 30.05 Lakh)
- Transfer pricing The Company’s management is of the opinion that its domestic transactions are at arm’s length as per the independent accountants report for the year ended 31 March 2017.
Management continues to believe that its domestic transactions post 31 March 2017 are at arm’s length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision of taxation.
Note 43- Recent accounting pronouncements Ind AS 115- Revenue from Contract with Customers On March 28, 2018, Ministry of Corporate Affairs (“”MCA””) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard permits two possible methods of transition: • Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors 104 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 105
Notes to the Financial Statements for the year ended 31 March 2018
• Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach). The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.
Note 44- Segmental information For management purposes, the company is organised into business units based on how reporting is done to the Chief Operating Decision Maker (CODM) in accordance with Ind AS 108. The Company has only one segment i.e. Garments which comprise almost 98% of the total business activities. Hence segment reporting is not applicable to the Company.
Geographical location wise segment data The operations of the Company are in India and all assets and liabilities (except certain receivables and payables) are located in India. An analysis of the segment revenue and segment assets by geographical market is given below :
(` In Lakh) 31March 2018 31 March 2017 Particulars Domestic Exports Unallocable Total Domestic Exports Unallocable Total External revenues 22,574.03 3,370.91 - 25,944.94 22,568.94 3,389.86 - 25,958.80 Other allocable income 72.33 56.44 - 128.77 145.56 31.82 - 177.38 Total Revenues 22,646.36 3,427.35 - 26,073.71 22,714.50 3,421.68 - 26,136.18 Less: Elimination ------Net revenue 22,646.36 3,427.35 - 26,073.71 22,714.50 3,421.68 - 26,136.18 Segment result 1,226.44 501.94 1,728.38 1,912.58 609.66 - 2,522.24 Other non allocable income/ (expenses) Finance cost (177.24) - - - (240.10) Provision for tax (648.42) - - - (884.16) Net profit 902.73 1,397.98 Other information Total Segment assets 7,824.55 670.17 2,236.12 10,730.84 7,753.51 535.34 2,359.22 10,648.07 Non-current assets other than financial 2,312.75 - 389.67 2,702.42 2,367.54 - 295.11 2,662.65 instruments and deferred tax assets Total assets 10,137.30 670.17 2,625.79 13,433.26 10,121.05 535.34 2,654.33 13,310.72 Segment liabilities 987.82 - 5,703.40 6,691.22 899.62 - 6,582.16 7,481.78
(B) Notes i) Accounting policies: Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole. ii) Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of trade receivables, inventories and fixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued liabilities. Segment assets and liabilities do not include those relating to income taxes. 104 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 105
Notes to the Financial Statements for the year ended 31 March 2018
Note 45- Transition to Ind AS: For the purposes of reporting as set out in Note 1, we have transitioned our basis of accounting from Indian generally accepted accounting principles (“IGAAP”) to Ind AS. The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the “transition date”). In preparing our opening Ind AS balance sheet, we have adjusted amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates previously made under IGAAP except where required by Ind AS.
A. Exemptions and exceptions availed Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS:
Ind AS optional exemptions Business Combination Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.
Deemed Cost Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties.
Leases Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.
The Company has elected to apply this exemption for such contracts/ arrangements.
Ind AS mandatory exceptions Estimates An Company’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP. 106 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 107
Notes to the Financial Statements for the year ended 31 March 2018
Note 45- Transition to Ind AS: (Contd.) B. Reconciliation between previous GAAP and Ind AS Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cashflows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS:
Reconciliation of equity as at 1 April, 2016 (` In Lakh) Footnote ref. Amount as per Effects of transition Amount as per IGAAP* to Ind AS Ind AS ASSETS Non-current assets Property, Plant and Equipment 2,421.05 - 2,421.05 Capital work-in-progress - - - Intangible assets 46.80 - 46.80 Financial Assets (i) Non-current loans 1 - 222.93 222.93 Deferred tax assets (net) 4 - 990.49 990.49 Other non-current assets 1 1,555.88 (1,462.82) 93.06 Non-current tax assets - 40.24 40.24 Total non current assets 4,023.73 (209.16) 3,814.57 Current assets Inventories 2 3,999.57 1,678.68 5,678.25 Financial Assets (i) Trade receivables 2 6,609.99 (4,647.74) 1,962.25 (ii) Cash and cash equivalents 18.45 - 18.45 (iii) Current loans 1 - 1,208.04 1,208.04 (iv) Other current financial assets 49.37 - 49.37 Other current assets 1 80.12 29.55 109.67 Total current assets 10,757.50 (1,731.47) 9,026.03 TOTAL ASSETS 14,781.23 (1,940.63) 12,840.60 EQUITY AND LIABILITIES Equity (a) Equity share capital 5.00 - 5.00 (b) Other equity Equity component of financial instruments - - - Retained earnings 1,2,4 4,149.73 (1,941.30) 2,208.43 Other reserves 2,208.26 - 2,208.26 Total equity 6,362.99 (1,941.30) 4,421.69 Non current liabilities Financial liabilities (i) Non-current borrowings 212.56 - 212.56 (ii) Other non-current financial liabilities 1 - 252.54 252.54 Deferred tax liabilities(net) 36.91 (36.91) - Other non-current liabilities 1 895.98 (854.54) 41.44 Total non current liabilities 1,145.45 (638.91) 506.54 Current liabilities Financial liabilities (i) Current borrowings 529.68 - 529.68 (ii) Trade payables 2,967.74 - 2,967.74 (iii) Other current financial liabilities 1 1,428.36 566.50 1,994.86 Other current liabilities 1 149.63 32.84 182.47 Liabilities for current tax(net) 2,197.38 40.24 2,237.62 Total current liabilities 7,272.79 639.58 7,912.37 Total liabilities 8,418.24 0.67 8,418.91 Total Equity and Liabilities 14,781.23 (1,940.63) 12,840.60 * Certain Indian GAAP figures have been reclassified to confirm to Ind AS presentation requirements for the purpose of this note 106 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 107
Notes to the Financial Statements for the year ended 31 March 2018
Note 45- Transition to Ind AS: (Contd.) B. Reconciliation between previous GAAP and Ind AS (Contd.) Reconciliation of equity as at 31 March, 2017
(` In Lakh) Amount as per Effects of transition Amount as per Footnote ref. IGAAP* to Ind AS Ind AS ASSETS Non-current assets Property, Plant and Equipment 2,442.61 - 2,442.61 Capital work-in-progress 4.06 - 4.06 Intangible assets 43.45 - 43.45 Financial Assets (i) Non-current loans 1 - 190.48 190.48 Deferred tax assets (net) 4 - 1,341.43 1,341.43 Other non-current assets 1 1,731.79 (1,623.17) 108.62 Non-current tax assets - 63.91 63.91 Total non current assets 4,221.91 (27.35) 4,194.56 Current Assets Inventories 2 3,940.30 2,191.68 6,131.98 Financial Assets (i) Trade receivables 2 7,442.97 (6,071.87) 1,371.10 (ii) Cash and cash equivalents 45.58 - 45.58 (iii) Current loans 1 - 1,403.28 1,403.28 (iv) Other current financial assets 48.25 46.17 94.42 Other current assets 1 89.06 (19.26) 69.80 Total current assets 11,566.16 (2,450.00) 9,116.16 TOTAL ASSETS 15,788.07 (2,477.35) 13,310.72 EQUITY AND LIABILITIES Equity (a) Equity share capital 2,208.26 - 2,208.26 (b) Other equity Retained earnings 1,2,4 6,151.84 (2,536.16) 3,615.68 Other reserves 5.00 - 5.00 Total equity 8,365.10 (2,536.16) 5,828.94 Non current liabilities Financial liabilities (i) Borrowings 1 - - - (ii) Other non-current financial liabilities 886.80 (612.22) 274.58 Provisions 53.69 - 53.69 Deferred tax liabilities(net) 1 0.79 (0.79) - Other non-current liabilities - 18.24 18.24 Total non current liabilities 941.28 (594.77) 346.51 Current liabilities Financial liabilities (i) Current borrowings 591.20 - 591.20 (ii) Trade payables 4,120.39 - 4,120.39 (iii) Other current financial liabilities 1 - 913.16 913.16 Other current liabilities 1 471.80 (323.49) 148.31 Provisions - 0.83 0.83 Liabilities for current tax(net) 1,298.30 63.08 1,361.38 Total current liabilities 6,481.69 653.58 7,135.27 Total liabilities 7,422.97 58.81 7,481.78 Total Equity and Liabilities 15,788.07 (2,477.35) 13,310.72
* Certain Indian GAAP figures have been reclassified to confirm to Ind AS presentation requirements for the purpose of this note 108 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 109
Notes to the Financial Statements for the year ended 31 March 2018
Note 45- Transition to Ind AS: (Contd.) B. Reconciliation between previous GAAP and Ind AS (Contd.) Reconciliation of profit or loss for the year ended 31 March 2017
(` In Lakh) Amount as per Effects of transition Amount as per Footnote ref. IGAAP to Ind AS Ind AS Revenue I. Revenue from Operations (Gross) 21,830.17 4,128.63 25,958.80 II. Other income 105.43 71.95 177.38 III. Total Income (I+II) 21,935.60 4,200.58 26,136.18 IV. Expenses Purchase of Traded Goods 10,836.41 - 10,836.41 Changes in inventories of finished goods, work-in-progress and 59.27 (513.00) (453.73) stock-in-trade Employee Benefits Expenses 2,001.63 14.17 2,015.80 Finance costs 472.36 (232.26) 240.10 Depreciation and Amortisation Expenses 340.02 - 340.02 Other Expenses 5,019.92 5,855.52 10,875.44 Total Expenses (IV) 18,729.61 5,124.43 23,854.04 V. Profit before Tax 3,205.99 (923.85) 2,282.14 VIII. Tax expense: 1. Current Tax 1,240.00 - 1,240.00 2. Deferred Tax (36.12) (319.72) (355.84) XIII. Profit for the period 2,002.11 (604.13) 1,397.98 XIV. Other comprehensive income A (i) Items that will not be reclassified to profit or loss - 14.17 14.17 (ii) Income tax related to items that will not be reclassified to - (4.90) (4.90) profit or loss - 9.27 9.27 XV. Total comprehensive income for the year 2,002.11 (594.86) 1,407.25
First time adoption of IND AS Reconciliation of net worth as at March 31, 2017 (` In Lakh) As on As on Particulars Footnote ref. 1 April 2016 31 March 2017 Equity under IGAAP 6,362.99 8,365.10 Summary of Ind AS adjustments For discounting of security deposits paid to mall management 1 (2.30) (2.49) For discounting of security deposits received from franchisor 1 2.66 4.31 For change in timing of recognition of revenue for sale or return transactions 2 (2,969.06) (3,880.19) For deferred tax impact on above adjustments 1,027.41 1,342.21 Total Ind AS adjustments (1,941.30) (2,536.16) Equity under Ind AS 4,421.69 5,828.94
Reconciliation of Comprehensive income for the year ended on 31 March 2017 (` In Lakh) As on Particulars Footnote ref. 31 March 2017 Net profit reported under IGAAP 2,002.11 Summary of Ind AS adjustments For discounting of security deposits paid to mall management (0.19) For discounting of security deposits received from franchisor 1.65 For change in timing of recognition of revenue for sale or return transactions (911.13) For deferred tax impact on above adjustments 314.80 Total Ind AS adjustments (594.86) Comprehensive income under Ind AS 1,407.25 108 THE MANDHANA RETAIL VENTURES LIMITED FINANCIAL STATEMENTS | ANNUAL REPORT 2017-18 109
Notes to the Financial Statements for the year ended 31 March 2018
Note 45- Transition to Ind AS: (Contd.) Notes to the reconciliation: 1 Security Deposit : Under Indian GAAP, interest free security deposits whether paid for exclusive brand outlets or received from franchisors were recognised at transaction price. Under IND AS, these security deposit should be recognised at its present value using an appropriate discount rate. The difference between the present value and the amount paid shall be recognised as a prepaid rent or advance income respectively which shall be then recognised as rent expense or other income respectively over the term of the base agreement.
2 Timing of recognition of revenue: Under Ind AS, revenue generated on sales made to certain distribution channels like franchisors, shop in shop and e-commerce, which are on sale-or-return terms, are recognised when sale is made to end customer by the respective disribution channel. Hence revenue has been deferred for such sales.
3 Employee benefits : Both under Indian GAAP and Ind-AS, the Group recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind-AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.
4 Deferred tax Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in recognition of deferred tax on new temporary differences arising due to Ind AS adjustments made above.
46 - Net debt disclosure In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ‘Statement of Cash Flows’. These amendments are in accordance with the amendments made by International Accounting Standards Board (IASB) to IAS 7, ‘Statement of Cash Flows’. The below disclosure is in line with such amendments suggested:
(` In Lakh) Particulars 1 April 2017 Cash flows Non-Cash changes 31 March 2018 Foreign exchange Fair value Acquisition movement changes Current borrowings Cash credit facility from bank 591.20 159.26 - - - 750.46 Total liabilities from financing activities 591.20 159.26 - - - 750.46
47 - There are no long-term contracts (including derivative contract) that are outstanding at the year end, 48 - The previous year figures have been regrouped and reclassified whereever necessary to comply with requirements of IND AS. As per our report of even date attached. For B S R & Co. LLP For and on behalf of the Board of Directors of Chartered Accountants The Mandhana Retail Ventures Limited Firm’s Registration No: 101248W/W-100022 (formerly known as Mandhana Retail Ventures Limited) CIN: L52390MH2011PLC213349
Rishabh Kumar Sangeeta M. Mandhana Priyavrat Mandhana Partner Managing Director Executive Director Membership No: 402877 DIN: 06934972 DIN: 02446722
Hemant Gupta Virendra Varma Mumbai Chief Financial Officer Company Secretary 28 May 2018 Membership No: 501212 Membership No: 30786 Notes Notes Notes
BEING FUTURISTIC. BEING TMRVL.
ANNUAL R EPOR T 2 0 17-18